New mortgage or refinance?

After the last few months of craziness in the housing market, I’m hearing from clients reevaluating whether they still want to upgrade to a newer or larger home.

They are getting frustrated with being sucked into bidding wars and feeling like they have to pay significant amounts over list price just to buy a home right now.

Several of these clients are first time home buyers, so they are going to hold tight renting for now.

One couple decided to move into their parents’ basement so they can cut costs and save more toward their down payment.

Two other families have decided to refinance their current homes to do massive renovations. Both love their current neighbourhoods, but wanted updated finishes and more modern floor plans.

By refinancing their current homes and staying put, they are still going to be able to accomplish this.

Due to the increase in the values of their homes there is enough equity to cover the costs of the renovations they are planning.

How does this work?

Current guidelines allow clients to refinance to 80% of the value of their home. For instance, if your home appraises at $500,000. you could refinance to a total of $400,000.

If you bought your home several years ago, it is likely the value has increased enough to allow for a refinance. Let’s say you bought your home ten years ago for $400,000.

Depending on the amortization and payment schedule you chose, let’s say your mortgage balance is now $300,000. The current market value of your home is $600,000.

This means, provided you qualify to carry the larger mortgage, you could refinance up to $480,000.

I don’t recommend maxing out your mortgage based on current values, but considering pulling some equity to renovate or expand your current home might be a great option as opposed to jumping into the fray of trying to buy a newer or larger home.

This might also be a great option to prepare your home to sell if you are definitely planning to move.

Presenting your home in its best light may increase the value to put you into a different price point if you do want to sell.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Comments are pre-moderated to ensure they meet our guidelines. Approval times will vary. Keep it civil, and stay on topic. If you see an inappropriate comment, please use the ‘flag’ feature. Comments are the opinions of the comment writer, not of Castanet. Comments remain open for one day after a story is published and are closed on weekends. Visit Castanet’s Forums to start or join a discussion about this story.

More The Mortgage Gal articles

About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories