Do I Need A Lawyer To Refinance My Mortgage? Refinancing a mortgage means that you get a new mortgage loan by adjusting existing conditions. Many homeowners want to refinance their mortgages to help lower their current interest rates or lower monthly payments. While refinancing your mortgage can be an exciting prospect, it can be quite a complex transaction and you will likely benefit from the legal advice of a real estate attorney.
What Does It Mean To Refinance My Mortgage?
While most mortgages in Canada have a payment term of 25 or 30 years, most people have a term of five years or less. This can vary depending on what works best for your situation at the time when you need to borrow money. Suppose you bought a house five years ago. The term of the mortgage is coming to an end and you still owe money on the property. It is worth researching which lenders or bank loans are now available to you.
There are many things to consider, such as whether you are in a better or tighter financial position. Or maybe another lender now offers a different loan interest or term that you want to use. Or maybe you want to free up some of the wealth you’ve built up in your home to pay for something else.
Changing your mortgage is called refinancing. Replaces the mortgage you now have with a new mortgage term and new conditions. The new mortgage can be with the same lender or with a new lender.
What Happened If You Refinance?
When refinancing your mortgage, you agree with a lender with the conditions of your new mortgage. At closing, the lender will pay off the existing mortgage in full and then take out the new mortgage on the property.
Why should I refinance?
It is worth considering refinancing your mortgage if your financial position has changed since you took out your mortgage. For example, if you received a significant pay rise and now qualify for a better mortgage, consider paying off your mortgage faster.
When interest rates rise (like now), you can refinance your mortgage or change the terms of your mortgage to lock in a fixed interest rate. Depending on your situation, setting a fixed interest rate can give you more stability in your budget planning.
Since our home is the biggest investment most of us will make, people often want to refinance their mortgage to get the best deal. But there are also other situations where refinancing can add value, such as:
- Buying from a co-owner of the property, such as in a divorce
- Use equity to renovate the property or make another major purchase
- Debt consolidation to save costs and administration costs
- Reduce or change your payments to pay off your mortgage faster
Do I Need A Lawyer To Refinance My Mortgage?
Do I need a lawyer to refinance my mortgage? When it comes to refinancing or increasing your mortgage, you should consult a real estate attorney who can review the terms of your mortgage and make the necessary adjustments for you. Here are some key reasons why you need a real estate attorney to refinance or increase your mortgage:
- Attorneys identify and explain the details in fine print, including terms and conditions.
- Lawyers help classify all your documentation and facilitate all transactions.
- The lawyers record your new mortgage electronically.
- Attorneys conduct title searches to verify financial liens.
3 Reasons To Hire A Lawyer When Refinancing Your Mortgage
Homeowners may consider refinancing a home loan for a variety of reasons, from lower interest rates to adjusting the length of the loan. As with many legal and financial transactions, refinancing a mortgage can be a daunting task. While not required, it is important to protect your interests by hiring an experienced mortgage advisor.
1. Avoid scams.
Predatory lending refers to lenders targeting people with dishonest tactics, such as charging hidden fees and providing misleading information about loan terms. These arrangements may seem cheap and affordable, but they are deceptive and can trap the borrower in a debt cycle. An attorney can help you review lender’s offers to determine whether the charges, fees, and terms are legitimate.
2. Protect your interests.
When refinancing your mortgage, it is imperative that someone takes care of you and your interests. While other people and companies involved in the process may be legit and trustworthy, nothing compares to having an experienced mortgage refinancing attorney by your side. It is important to note that even if another lawyer is present (for example on behalf of the lender), this person is not YOUR lawyer. Hiring your attorney is the best way to ensure that everything is done correctly and in your favor.
3. Simplify the process.
Many different parties are involved in the refinance of your mortgage and it can be a complicated legal transaction. A lawyer can help you simplify the process and make sure it runs smoothly. Plus, they can give you peace of mind by reviewing your documents and guiding you through the next steps.
When you refinance yourself, without the help of a real estate attorney, you save money that a lawyer would charge for what may be little more than some advice and administrative duties. The refinancing process is not yet free; Lenders charge when you sign up for a new loan, and your old mortgage may have an early repayment penalty that you have to pay when you switch from your old mortgage to the new loan. If you choose to hire a mortgage broker, you will also have to pay a commission. This makes it a lawyer-free way to keep refinancing costs under control.
The Refinancing Process
When you refinance without a lawyer, the first step is to look at your current mortgage. Determine if it includes a prepayment penalty and finds out what your interest rate is. If you have an adjustable-rate mortgage, determine how close you are to the maximum interest rate and how quickly your lender can raise your rates. The next step is to buy a new mortgage, which is very similar to the process of buying your original mortgage. Since refinancing is so similar to getting a mortgage, the chances are even greater that you can go through the steps without the help of a lawyer.
Refinancing without a lawyer does not mean that you are on your own to refinance your home. If you use a broker who charges but can show you mortgages from many different lenders at once, you have a personal point of contact who can negotiate on your behalf and explain the differences between refinancing options. Even if you don’t use a broker, the lenders you approach should be able to explain their products and answer questions about how the new loan is different from the mortgage you already have. A financial planner can also help you make refinancing decisions, as the new payment schedule affects your household budget, retirement savings, and investment goals.
Avoid Scams – Do I Need A Lawyer To Refinance My Mortgage
One situation where you can enlist the help of a lawyer is if you suspect you are under a refinancing arrangement. Such arrangements prey on homeowners dealing with foreclosure. They usually come in the form of cold calls or emails with a discounted interest rate. Refinancing scams usually require an upfront payment or do not explain the costs and fees associated with refinancing. An experienced real estate attorney can help you assess a refinancing offer and determine its legitimacy, eliminating the need to make an offer that charges you, but never provides real relief.