Hi everyone! Today we’re going to talk about whether it’s better to move or refinance your current house.
Before we get into how you would make this decision, let’s do a quick refresher on what a mortgage refinance is. Right now, you pay your mortgage every month, right? A part of your payment goes towards your principal (aka the actual loan amount of your house) and another part goes towards the interest on your loan. The interest you pay each month is dependent on the interest rate you got when you signed the papers on your fixed-rate mortgage.
If you have a high interest rate, you’ll either have higher payments or more of your monthly payment will go towards interest, rather than paying off the loan amount. So you want the lowest possible interest rate you can get so you pay off more of your principal and give less money to the bank.
A refinanced mortgage is basically a new mortgage but with a lower interest rate so you can do just that. The interest rate you get is dependent on the overall economic market and your personal financial circumstances.
Okay, so back to the question: should you move or refinance? If you’re trying to decide this, you need to get honest and answer some questions.
Question 1: Do you like your home? If you are super attached to your home, find its little quirks add more character, and couldn’t imagine living anywhere else, then you’ll want to refinance.
But if you’re kinda meh on your home and could take it or leave it, you may want to look into moving.
Question 2: Do you like your job and neighborhood? If you think you’re going to stick around for several more years, then consider refinancing.
But if you want to try a new neighborhood or city, then you might want to move.
Once you answer those 2 questions, you’ll have a pretty good idea of whether you want to move or refinance. But the logical among us might want something more concrete. And in that case, it’s math time.
You’ll want to price out the costs of moving or refinancing. Both a refinance and moving to a new home will have you paying closing costs.
Since the market is so hot right now, you might be better off selling your home, taking that sweet, sweet value appreciation, and then reinvesting it in a new property.
I recommend getting a value estimate on your current homes, looking at the prices of the homes in the area you’d want to move to and comparing from there. If your home’s value is lower than those listing prices, you might want to refinance and then wait for your home to appreciate in value a bit more.
And if you want any help making this decision, please feel free to reach out. I’m happy to talk about your options with you. Just contact me using the information below !
Karla Saa
CNE | Broker
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HomeTap.ca
RE/MAX Real Estate Centre Inc., Brokerage.
1140 Burnhamthorpe Road West
Suite 141
Mississauga, ON. L4C 4E9
D: 416-881-3770
karla@hometap.ca | www.hometap.ca
