Important Points on Refinancing and Second Mortgages

Refinancing has become a buzzword in the current scenario on account of low mortgage interest rates. Many Canadian homeowners have a slew of debts including exorbitantly high interest debts such as credit cards and personal loans. As refinancing, or taking out a second mortgage, allows homeowners to tap into the equity of their homes and get a lump sum, many Canadians are asking whether such a move will solve their debt woes. Well, there are no generalized answers for this. Refinancing mortgage might work for some people, while for some, it can be an imprudent financial decision. The financial state of each individual is different, and therefore, it is important to do a thorough analysis of all the pros and cons of refinancing your mortgage. In the following paragraphs, we will take a look at the important points you should consider before taking a second mortgage.

Do a Thorough Analysis of your Financial Health

First, and foremost, it is extremely important for you to a thorough analysis of the state of your finances. You need to have a thorough understanding of what refinancing will achieve for you financially. Calculate the interest you are paying on your other debts currently, and try to get a rough estimate of how much lump sum you need to clear those debts completely.

Read more@