Risks of Mortgage Refinancing In Canada

Mortgage refinancing may be looking good at the moment if you are planning on lowering your monthly payments to be able to save some money, but if you are not careful, you might end up paying more than you can afford and even lose your home in the process.

Things You Need To Avoid While Applying For Mortgage Refinancing!

Here’s what you need to avoid when you are applying for mortgage refinancing.

Don’t agree on arbitration. When applying for mortgage refinancing, there may be a clause that allows arbitration where a third party can be brought in to solve any disputes between the two parties. Keep in mind that there are laws that provide protection to your rights as a homeowner which can be voided if you agree on arbitration.

Check the Good Faith Statement. The Good Faith Statement on your application should be read carefully as there may be a possibility of the overpayment if you don’t read the fine print. Take note that the origination fee should not go higher than 1.5% with the processing fee for your loan is not more than $400. If there are fees like application fees, courier fees, and even broker administration fees being asked by the lender, you should look for another company.

Watch out for high-interest rates. Watch out for lenders who are asking for a higher interest rate. If you want to get fair rates for your credit, you will need to compare companies first. This can help you narrow down your choices.

Take note of the risk of foreclosure. There are mortgage lenders that can trick you into filling out incomplete documents which can put you at risk of defaulting on your property since the borrower is paying more than they can afford. The best approach here when you are applying for mortgage refinancing is to know how much you can pay every month so you will not make the mistake of accepting a loan that is way too much for your monthly salary.

Know your reasons for refinancing. Homeowners have different reasons when it comes to refinancing their mortgage such as lowering their interest rates. But this may not be the best solution available since any fees related to the loan can be higher than that of reducing your existing interest rate from your previous loan. It would be a good idea to ask a financial planner or a tax attorney for help with regarding your mortgage refinancing so you are completely clear on what to expect.