Have you ever overheard the person next to you describe their monthly phone bill and realize they are paying less than you for the same plan? In some ways, mortgages can be the same. 

What is refinancing?            

Refinancing is when you break your current mortgage and start a new mortgage with the current mortgage brokerage or a new one. Refinancing is usually done to get a lower interest rate to bring down your monthly mortgage, consolidate debts and access the equity in your home.           

Pros of Refinancing

• Lower monthly payments: Refinancing for another term after making payments towards your old mortgage and earning equity lowers the principal of your loan. This, in turn, lowers your monthly payments.

• Lower interest rate: If interest rates fall after you close on a loan, refinancing can help you take advantage of the lower rates. With a mortgage refinance, you have the possibility of getting a lower interest rate.

Cons of Refinancing

Refinance loans have closing costs just like a regular mortgage. You might need to set aside a portion from your budget to cover closing costs, which might include appraisal fees, title services, lender origination/administration fees, survey fees, underwriting fees and attorney costs. It all depends on where you live, the value of your house and the size of the loan you’re taking out.

Lastly, Before you refinance, check out and consider the costs to refinance. Review all potential costs eg prepayment charges (which can be charged before the term is done), property valuation fees and associated fees for mortgage registration.