• Why Refinance Reasons Are Changing

    As a mortgage broker/banker, I always find it intriguing asking the purpose of the refinance. A purpose to me is a remedy. It must fix the the problem as an ultimate goal. During the period of the lower interest rate environment, these were the most popular reasons to tap into their home equity:

    • Remodel/renovate home
    • Consolidate debts – improve cash flow
    • Borrow for other investments [another home]
    • Help support children – education or help with a down payment
    • Install a pool

    In the past year, all these valid reasons for refinance were all changing. What changed? Inflation and interest rates. It is much more expensive to live today. What has gone up? Energy, food, travel, entertainment, rents and hospitality have shot up. This rise in prices and payments is having a drastic change to the purpose of refinancing.

    Today’s mortgage client is scared. We receive many calls from mortgagors whose mortgages are maturing and are renewing with today’s mortgage rates. In some cases, payments have jumped by more than $1000 per month.

    Why refinancing your mortgage can be good for you even with higher rates and a looming recession:

    • Make payments easier – amortization
    • Goal not to pay off house
    • Fear of job loss or starting family
    • Survival financially
    • Child’s education, investment purposes
    • Consolidate debts
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