Refinancing Smart. 5 Tips For Battling A Crappy Economy

You may be testing the waters right now to see if the temperature is right for you to take the refinancing plunge or if you should wait for the credit markets to thaw a little more. Refinancing is a smart move – under the right set of circumstances.

Here’s how you make the best decision for your financial situation while positioning yourself for success.

• Analyze your overall situation: Is your employment picture clear? Nobody wants to take on new debt if they’re not convinced of their ability to repay the loan. However, if your employer is making noise like there might be a layoff coming at some point in the future, it might impact your decision, especially if you’re considering refinancing your mortgage and pulling additional cash out of your home to pay off other bills.

Refinancing while reducing your monthly debt burden could make perfect sense to you if you’re afraid of the long-term potential for an interruption of your income.

• Analyze Your Credit situation: In Canada, your mortgage agent will pay particular attention to your credit situation when refinancing. If your credit needs CPR, prepare to do what you need to do to breathe some life into your chances for approval.

Check your credit report for errors, inconsistencies, and accuracy. If you turn up mistakes or other problems, take care of them now by paying off any delinquent accounts or getting inaccuracies removed from your credit report. A little work now can make a world of difference in the interest rates you’ll pay and the terms you’ll get when refinancing.

• Get the best mortgage agent: Look for a mortgage agent who’s been around the mortgage block a time or two – and knows how to treat clients. Your agent should be striving to give you the refinancing package that works best for your financial situation and your goals, not the one that will allow him to retire the most quickly. Ask plenty of questions and make sure any prospective broker has good references.

• Get your best rate: Refinancing rates can be tough to compare because there are so many variables that go into the process. Right now, rates can fluctuate very quickly because of the overall financial situation. To help guarantee you get the best numbers to play with, compare quotes pulled on the same day – and for the same type of loan.

Hot tip: If you’re unsure whether you might possibly get laid off or suffer some other financial setback in the near term, consider a longer loan term than you otherwise might. Your required monthly payments will be lower – so you’ll have the flexibility of paying less if you run into trouble.

If you don’t, simply pay more each month in order to pay your loan off more quickly. Either way, you’ll have the best of both worlds. Keep in mind that if you do take longer to repay your loan it will cost you more in interest payments – but that flexibility can be a real lifesaver during uncertain financial times.

Timing your refinancing options to capitalize on the best loan rates can be a little tricky, but it is an attainable goal. A little added caution can help cover your assets in the event you run into an unforeseen financial problem. Being smart with your money includes being prepared for any possible contingency.

Need to unlock your home's equity - but have a few questions? Why not consider a free private email consultation with me, Darrin Roseborsky? There's no obligation or commitments to worry about. Just helpful answers to your questions. Use the short form in the top-right corner to get started. And in a few minutes, you'll have the answers to all of your questions.