How To Refinance During an Economic Downturn

Is refinancing your existing mortgage loan is on your to-do list? Then it’s important that you exercise caution to ensure that the loan you wind up with is the best solution for your current situation – and that it will have a positive impact on your finances regardless of what happens economically.

There’s no doubt that the economic outlook is gloomier than it was just a year ago, but that doesn’t mean that you can’t get a good loan refinance rate or the perfect loan that can help you come through the economic fog in better condition than you might expect.

First, recognize that the national economic outlook doesn’t necessarily impact your personal economy. While certain areas of Canada are struggling more than others, many people feel relatively secure about the prospects that they’ll be able to hold onto their jobs.

Unless your employer has told you that you’re likely to lose your job or you’ve seen evidence that your employer may be struggling – such as bounced payroll checks, other employees within your company being laid off, or large numbers of employees at competing companies being laid off – your job is probably relatively safe.

Even though your personal job outlook may be good, it makes good sense to be cautious anyway. For this reason, a refinance loan right now could be one of the smartest moves you can make.

Rates are at historic lows right now, so your monthly mortgage payments stand to decline sharply by taking advantage of the opportunity to refinance.

The reason I say this is because refinancing to a lower rate could save you money on interest payments and could also substantially reduce your monthly mortgage payments.

So, if despite the fact that your job appears to be safe, if something changes during this economic downturn and you find out that your job is in fact being eliminated or you’ll be laid off for the short term, you’ll be able to slide through the downturn in better shape because of your reduced mortgage payment as a result of taking the initiative to refinance now.

Before making the decision to jump on the refinance bandwagon, consider first whether you’re planning to sell your home in the near future. If you are, refinancing may not make much sense. While your monthly payments will probably fall, there are certain expenses associated with refinancing that can eat into your monthly savings in the event that you’ll only be in your home for a short time.

Don’t forget, too, that negative economic news and large numbers of lay-offs impacts the marketability of your home. Fewer employees nationally means a smaller market for homes, which will increase the time it takes to sell

Here are a few other steps you can take to help ensure that you get the best refinance deal for you – regardless of what the future economic outlook is:

1. · Compare Rates – All refinancing rates aren’t created equally. While some appear to be better than others, lenders and brokers sometimes attach fees and other costs to their loan packages that can dramatically increase the cost of your loan. Do the math and figure your total loan cost so you can compare apples to apples.

2. · Ensure That Your Credit Profile Reflects Your Best Side – This may seem like a never-ending point that I make, but it’s important that your credit report contains the most accurate, up-to-date information possible about your creditworthiness. Important lender decisions are based upon information in your credit report. There’s only one way to know for sure: Get a copy of your report and look it over for accuracy. If it’s not accurate, contact the credit reporting agency and get it fixed!

3. · Work With a Mortgage Agent Who Can Walk You Through the Refinance Process – The best mortgage brokers will be trusted allies, people who will work tirelessly to ensure that you get the best loan for your situation. Experience has taught the best brokers how to navigate the market, learn about your goals, and give you the smartest options that help you reach your goals with the least overall cost.

Follow my advice and your refinance loan can help get you through the economic downturn unscathed – in better shape than before. Better days will come, but in the meantime, protect yourself and your future by refinancing smart and ensuring your financial future.

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.