Benefits Of Refinancing Mortgages

If you current mortgage loan is on the higher side, you can consider the idea of refinancing it with a lower rate of interest, and other better terms and conditions. If you plan well and get a good refinancing deal, you could well end up saving thousands of dollars on your mortgage. This is especially true for those homeowners who are insecure because they have an Adjustable-Rate Mortgage (ARM). There are certain terms and conditions that a homeowner has to fulfill to qualify for a refinancing option. A good credit score is one of the most important prerequisites for qualifying for a refinance.

A number of people take the decision of refinancing mortgages to cut down on their monthly installments. A high monthly payment can easily be reduced if the refinancer offers favorable terms and conditions. The following example will elucidate how refinancing a mortgage can help in reducing your monthly payments.


Joe had taken a $200,000 mortgage loan in 2010. The rate of interest was 4.5% and the term was 15 years. According to the agreement, Joe had to make a monthly payment of $1,560 towards the home loan. In March 2014, Joe refinanced his mortgage with another financial institution. He arrived at this decision after taking into account the fact he could do better with a lower monthly payment. According to the new mortgage plan, Joe gets a 30-year term at 5%, bringing his monthly payment down to $1,074. One important thing to remember is that although Joe might pay lesser every month, he pays more over the course of the loan. He will also have to pay additional charges, such as appraisal fees, refinance fees, etc.

There are still a lot of benefits of refinancing a mortgage; let us take a look at them.

Change in Mortgage Plan

Refinancing a mortgage gives homeowners the option of changing their mortgage plan. Sometimes, many homeowners are stuck with an ARM mortgage that has high interest rates. Refinancing a mortgage can give homeowners an opportunity of switching from an ARM mortgage to a fixed mortgage. Also, homeowners who want to extend or reduce their loan term can also do it by refinancing their mortgage.

Helpful Tips On Debt Consolidation

Many Canadians are finding it increasingly difficult to deal with their debts. Amidst the mire of mortgage loans, personal loans, and maxed out credit cards, an increasing number of people are looking at debt consolidation as a viable option to deal with their debt woes. Some are looking to refinance their home to get a lump sum amount so that they can pay off their high interest debts. However, there are as many debt consolidation companies out there are credit lenders. Although a majority of these debt consolidation companies work towards providing a systematic plan of consolidating their clients’ debts, there are some shady companies with vested interests as well. Therefore, choosing the right debt consolidation company is of paramount importance. A debt consolidation firm should be willing to work to provide you lower interest rates so that you can effectively manage your debts. There are a lot of other factors that you should pay attention to before you make up your mind for taking the help of such services. In the following paragraphs, we will take a look at some important tips on debt consolidation.

Get an Understanding of your Debts

While taking the help of a company which specializes in debt consolidation might be a prudent step, it is important for you to at least have an understanding of the rate of interest and the term of your outstanding debts. This will help you in getting clarity on the exact state of your finances. Knowing about your debts will also prevent a shady company from taking you for a ride.

Do Thorough Research before Choosing a Company

As we mentioned before, there are a lot of debt consolidation companies out there who are willing to help you at the most affordable costs. However, as is the case with other companies in the market, not every company delivers on what it promises. Therefore, it is better to do a thorough research on the credentials of a company. A lower fee should not be the only criteria to select a company – you should look at other factors such as the time it has been around, its reputation, and the feedback about it. After doing your research, you should narrow down five to six companies, and compare the services they are offering you. Choosing one which provides you the best services will go a long way in ensuring that debt consolidation works well for you.

Follow the Debt Consolidation Plan

By combining all the outstanding debts of their clients into a single payment, debt consolidation companies make it easier for you to deal with your debts systematically. However, for debt consolidation to work for you, it is extremely crucial that you do not default on your payments. The reason most of us find ourselves with huge debts is because we do not plan our finances in the right way. Failure to pay our bills on time quickly leads to debt accumulation. Therefore, it is pertinent that we stick to the plan that the debt consolidation company has created for us. Buying anything on credit should be avoided at all costs until you debts are cleared.

The tips that we have mentioned above have not been retrieved from a hidden vault. There is nothing surprising about them, and I guess, all of us have some sort of understanding of what to do while dealing with debt consolidation. However, it is ironical that despite knowing all of that, we continue to make poor financial decisions and rake up one debt after another. Therefore, however clichéd it might sound to you, remember these tips while making a decision on debt consolidation.

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New Mortgage Refinancing Rules In Canada

Recently, the Canadian government has announced certain changes to the mortgage rules and regulations in Canada. As of July 9 2012, new rules will be applicable to the government backed insured mortgages, with the borrower having less than 20% down payment on his side. In addition to this, the government has planned to:

• Reduce the maximum amortization period on a mortgage loan from 30 years to 25 years

• Drop the upper limit on the amount that one can borrow against the equity to 80% from 85%
• Bound the Gross Debt Service (GDS) ratio to a maximum of 39% of the income, where GDS ratio corresponds to the household income spent on property taxes, mortgage, and heating
• Limit the Total Debt Service (TDS) ratio to utmost 44% of the income, where TDS ratio corresponds to the part of household revenue spent on all the debts including the mortgage
• Restrict the government-backed mortgages to homes priced at amounts less than $1 million; however if the home is priced at a value of $1 million or more, the buyer must have a down-payment of at least 20%

These new rules are applicable to mortgages on all the residential properties up to four units. However, these set of laws do not apply to:

• Renewal of the existing insured mortgages, where no new funds are being added to the existing mortgage
• Mortgages which do not call for government backed mortgage insurance, typically those with a down payment of 20% or more
• Construction and/or development of multi-unit buildings, say five units or more, that are owned by a landlord   

In four years, this is the fourth time that the Canadian government has tightened the rules for borrowing. According to the first modifications made in the year 2008, the maximum amortization i.e. the payback term was reduced from 40 years to 35 years. Additionally, with the introduction of new loan document standards, the homeowners were required to have a down payment of at least 5% compared to the previous level of 0%. 

For more details you can visit @ http://www.canadalend.com

Getting Mortgage Loans For People With Bad Credit Ratings

Most Canadians out of ten have one thing in common - poor or bad credit score. It is no brainier that those surviving with a poor credit history are, often times, rebuked more than once from availing another mortgage or loan by the financial institutes and banks. Getting mortgage for people with bad credit rating is a tad difficult situation, but not entirely impossible.

When you are at the receiving end of a pressing mortgage need with a bad credit score on the sheets, you need to remember of two important virtues taught in school. Discipline and Planning. These two might take you distances while applying for the right mortgage plan. This may entail time consumption, but with effective application of discipline and planning it will definitely help you in a broader spectrum.
 

• It is best advised to seek a professional aid, like that of a mortgage broker, even before you start rolling out applications to various banks and financial institutes.
   
• Never send out, incessantly, mortgage applications to a number of banks. This will only affect your credit score due to continual credit history inquiries pulled out by various banks. It’s best to narrow down your list to likely banks and institutes with whom you stand a chance and then float applications likewise. This way you save yourself a lot of effort as well.
   
• If you avail the services of an expert, like a mortgage broker, he will perfectly guide you through the complete process. He will initially seep in every detail of yours and then judge which banks or institutes will definitely consider your application.
   
• He would also know which programs or financial products of a particular bank would deem best with your situation.
   
• When you hire an expert aid, it will be a good move to get your mortgage low credit score personally reviewed by the broker. Take a one-on-one guidance from the broker on your credit rating, know where you exactly lack and understand what measures might surge you up from it.
   
• Remember, down payment will be more than normal. Make sure you have enough of it saved already.