Refinancing your home can help you take advantage of lower interest rates, give access to your home equity and consolidate debt. By refinancing your home, you can use up to 80% of your home's value. This can help pay off any current outstanding balances on credit cards and save money on the interest rate or finance home improvements.
In order to refinance your home, you may do one of several things:
- Break your contract early
- Add a line of credit
- Mix or extend your current mortgage
There are those who use an equity take-out for investment purposes, or to purchase another home or recreational property. With the higher cost of second mortgages, consumers with existing equity for the most part will choose to break the current mortgage and use the available equity. Whatever your reason for refinancing, low mortgage rates and the flexibility the market offers with increased equity might make this a viable option. Refinancing will involve breaking your current mortgage and paying penalties to the current lender and expenses for legal costs (a lawyer will have to change title of the property and register a lean for a new mortgage amount).