If the savings outweigh the cost then youre in business! Again, it all depends on the specific terms of your mortgage agreement, and it may make sense to have a financial advisor assist you in deciding whether to refinance or not. The number one way to gain some advantage from todays economy is to refinance your home so long as your current interest rate is high enough over 5 that the savings make up for any incurred fees and/or penalties. While the advantage of variable rate mortgages has been unambiguous over the last twenty years we may see a change in the next few years.The Canadian economy contracted at a sharp annualized rate of 3. Even with a penalty to pay it can be smart to swap lenders or refinance mortgages to get the lower interest rates. Because faith that todays economy will undoubtedly bounce back means that mortgage interest rates will eventually rise again, fixed rate mortgages may be the better choice.
The important thing to do is to analyze how much (total) it will cost you to refinance your home, and compare it to the savings that will result from your new, lowered interest rate. When you refinance your home youre contributing to making things better. Fixed Rate Mortgages The lower interest rates on variable rate mortgages are decidedly enticing. However, despite their clear cost advantage, many Canadians prefer to opt for the safer, fixed rate mortgage. Based on its projections, fixed rate mortgages currently appear to be the least costly, Desjardins said, in part because there s little room for any further discount for variable rates.
Its no surprise that the Canadian real estate market has cooled, since consumer confidence is at an astounding low. While it can be very tempting to jump into a refinance deal, you must do your homework and make sure you understand every cost associated with refinancing. This enables a percentage of refinancing homeowners to stay in their homes rather than attempt to sell them. It is a question of risk tolerance, and you must decide how you would deal with interest rate fluctuations and their impact on your monthly mortgage payment and household budget. Because of the financial crisis, the Canadian mortgage market has changed.4 percent in the fourth quarter of 2008. With lower interest rates estimated to stay through the end of this year financial institutions hope the rush to refinance continues for another six months or so. Make sure to read the fine print in all documents and contracts. The global financial crisis impacted Canadas exports and consumer confidence took a blow.
The January jobs report showed a monthly loss of 129,000 jobs. The surge in home refinancing is expected to have a positive impact on the Canadian economy. The resulting decrease in mortgage interest rates has brought on an onslaught of refinance applications. Some mortgage lending companies have been able to stop or slow down layoffs and some have even begun hiring again in order to handle the torrent of applications. direct current machine Though politicians and analysts optimistically expect the market to rebound late in the year, most agree in the expectation that things will get worse before they get better. Homeowners that reduce their interest rate will typically lower their monthly payments by more than $100, which adds to disposable consumer income to pump back into the economy. Pay special attention to clauses regarding prepayment penalties, which can typically average about three months worth of interest. According to some, the refinancing trend started in October and has become more popular in 2009.