Home refinancing can be a great option when you have too much debt and you’re looking for a way to pay if off sooner. By refinancing you will get rid of your old mortgage completely and replace it with a new one. However, when you get the new mortgage, you could apply for more than you actually need. These additional funds can then be used to pay down your debt, and then pay it back through your mortgage at a lower interest rate. But what is the process of home refinancing for this purpose? It can be a complicated one, and you’ll need a good mortgage broker to help you through it.
When you refinance, you first have to be approved to do so, and this is where it can become a bit complicated. Many homeowners think that anyone can refinance their mortgage at any time they want, for any reason they choose. But truthfully, the process can be pretty difficult. In order to be approved for home refinancing, most lenders will require that you have an excellent credit history. And this is especially true if you’re applying for the refi for debt consolidation, as the very reason for it could indicate to the lender that you’re a risky borrower. Even good credit might not be enough to get you approved for a home refinancing so this is something you’ll have to seriously consider when refinancing for loan consolidation.
But a great credit standing isn’t the only thing you’ll need for refinancing. You’ll also need to have a stable employment history, just like you did when first applying for your mortgage. Again, this is especially true when refinancing for debt consolidation because your debt-to-income ratio will still be very high. Lenders will look at this and determine that you already have quite a bit of debt to repay and so, they’ll carefully consider whether or not you can take on more debt – as you will with a home refinance.
Once you have met all the requirements for home refinancing, you’ll then need to break your existing mortgage in order to obtain a new one. This can get expensive, and closing costs and interest fees will apply. Aside from being costly, this can also be quite complicated, and you’ll need a good Toronto mortgage broker to help you sort it all out. With any home refinance, there is a ton of paperwork, a ton of requirements, and it can give you a big headache. Toronto mortgage brokers however, complete home refinances every day – and they’re the ones that will be able to help you sort it all out and get the home refinancing for your loan consolidation.