5 Things you should know about refinancing your home for a renovation project

Are you thinking of refinancing your mortgage soon? There are many things to consider before you do that. Like any decision, it can have its good and bad benefits.

Getting your home renovated is a good reason to get your mortgage refinanced so that you can have the money to spend on what needs to be repaired.

But before you start looking for your options, here are five things that you must know first.

1. Depending on when your lender issued the first loan, you might need to look for a new one – this depends on how long you have been paying your mortgage. If you’ve been paying it for a while now, then you can approach your lender and see if you can negotiate the terms of your mortgage as you will need some money for the renovations. Most lenders require that a period of 120-180 days has passed before they can consider refinancing. If you have not yet met that requirement, it may be time to look for a new lender.

2. Make sure to check if there is a prepayment penalty clause in your contract – don’t be one of those people who does not read everything in the contract being signed. Before you think about refinancing, check your mortgage to see if there is a prepayment penalty clause in your contract and how it could affect your goal of getting refinancing. If the amount of the prepayment penalty is more than what you can actually save, then it’s better to look for other options.

3. There may be times when refinancing is not the better choice – if you only have a few months left in paying for your mortgage, getting a refinancing may not be the best decision to make. Some experts would say that you are only going to prolong the terms and you might have to pay more in terms of interest.

4. Refinancing a mortgage can get you a lower interest rate – one good benefit of getting refinancing is that you can negotiate for a lower interest rate than the one you are paying now. Look at your options because, in some instances, you may be able to lower your interest rate by at least 2%.

5. Make sure to get a good advice on how to get a proper refinancing package for you – if you have decided to go ahead with refinancing your mortgage, make sure to not only do proper research but to get as much advise as possible from experts. There are instances when people make the wrong choice in their refinancing package as there are a lot of options, and their wrong choice leads to them being saddled with more money that needs to be paid when the goal is to lower the interest rate. You can approach experts like the people in Altrua Financial. They have been in the business for a while and have shown expertise and efficiency in handling all their clients’ concerts regarding mortgage, refinancing and more.

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