Mortgage terminology can be difficult to understand at times, therefore it’s not uncommon for people to get it wrong. It can be perplexing at times.
A seasoned mortgage professional will be able to comprehend your needs and help you make the best decision. For example, if you ask a mortgage representative about their lowest refinancing rate, they may respond with a list of questions and may also ask you to complete a mortgage application so that they can see the whole picture. Once the details have been fully disclosed such as income, credit etc., the mortgage representative can then give you the the options available to you. Without the big picture it is difficult for the mortgage representative to share all the options available to you.
So, what is the distinction between the various transaction types?
Mortgage Renewal
When you approach your maturity date…also known as your renewal date…your mortgage is up for renewal. At this point your mortgage contract expires and your mortgage becomes fully due and payable. Most people cannot afford to pay off their mortgages at this time unless they have lately received a large sum of money. Your mortgage lender will then give you with your mortgage renewal alternatives.
It happens quickly.
It’s simple.
It’s the path with the least amount of resistance.
It is the least costly option
Mortgage Refinancing
Mortgage refinancing is essential if you want to increase your amortization up to 30 years to minimize your payments or if you want to take equity out of the home. While the process is identical to a mortgage transfer, the pricing is different.
While mortgage renewal fees are typically covered when switching mortgages, the borrower is responsible for the expense when refinancing. There are costs associated with a refinance such as a penalty for breaking the mortgage prior to the maturity date
When discussing your mortgage alternatives, using the correct terminology will help your mortgage professional understand your goals easier help you make a decision that is in your best interest.
