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Learn what it means to refinance your mortgage loan and how this could help you reach your goals.
Whether it’s a TD Mortgage or a TD Home Equity FlexLine, refinancing can help with certain goals:
Debt consolidation. Merge higher interest debts into one manageable payment with a lower interest rate.
Home renovations. Get the money you need to renovate or make repairs.
Investing. Take advantage of an investing opportunity (speak to your tax advisor first).
There are a number of different ways to determine the estimated market value of your home. Many realtors will help you work out a recommended selling price based on recent sales in your neighbourhood. There are also a number of online real estate services which track real estate sales and provide daily updates on estimated property values.
While you can pay to have your home professionally appraised at any time, TD requires its own appraisal during the application process.
While you should only ever refinance your home with good reason, there are no rules that limit how often you can refinance. Lenders, however, will typically set a limit. Keep in mind that your credit report will be pulled each time you refinance, and when this happens too frequently it can negatively affect your credit score. Since your credit score is also a factor in a lender’s decision to approve your refinancing, a lower score would also lower your chances of approval.
Renewing your mortgage means staying with your current lender for another term. You’ll have an opportunity to renegotiate your interest rate and term, and you won’t need to re-apply.
When you refinance, you are paying out your existing mortgage in order to negotiate a new mortgage loan agreement. This is usually because you want to access the equity in your home or lower other borrowing costs. There may be prepayment charges depending on when you choose to refinance.
When interest rates fall, the possibility of getting a lower mortgage rate is a strong reason to consider refinancing if you need additional funds. A reduction in your mortgage rate could lead to significantly lower monthly payments.
However, you must factor in the costs of ending your current mortgage, including any prepayment charges, as well as how long you expect to live in your home. Only then can you determine whether it’s worthwhile to refinance at a lower rate.