Mortgage Refinancing Questions

by Irene from Canada

Regarding debt consolidation and mortgage refinancing questions: Dear Kate, I have a $217,000 mortgage balance at 4.89 percent until 2012. Years left on the mortgage are 21 years. I originally amortized the loan over 25 years starting in 2005.

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One bank will give me 4.79 percent and pay all fees to refinance into a 5 year term fixed mortgage. Another bank will give me 3.99 percent on a 4 year fixed but I must pay the penalty of $5250.00.

I also want to consolidate a variable line of credit of $22000 at 4.75 percent and have to pay CHMC of approximately $1200.00.

But I don't know which is better or if consolidating is even a good idea. Can you help please, Kate. Thanks, Irene

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Mortgage Refinancing Questions Answered By Kate

Hi Irene, Good mortgage refinancing questions!

To begin, am I right that CHMC is a designation for Canada Mortgage and Housing Corporation? If so, I must mention, I am not an expert on Canadian financing. That being said, I'd be happy to address your questions.

I broke your four mortgage refinancing questions into two categories: options and considerations.

Option One: One bank will give me 4.79 percent and pay all fees to refinance into a 5 year term fixed mortgage.

Option Two: Another bank will give me 3.99 percent on a 4 year fixed but I must pay the penalty of $5250.00.

The two options compare a higher interest rate with no fees to a lower interest rate but with fees. Assuming you are able to finance the fees, your appraised value may make this determination for you. If there is not enough equity in your property, Option One may make the most sense. However if getting the lowest payment is your goal, take a further look at Option Two.

But keep in mind Option Two, although it has a lower mortgage rate, will increase the principal balance since I assume you will finance the fees. This can raise your monthly house payments. Go here for my mortgage rate calculators to look at the difference in the payments if you added the fees of $5250 to the mortgage balance of $217,000 compared to a true no-cost refinance.

Consideration One: I also want to consolidate a variable line of credit of $22000 at 4.75 percent.

Consideration Two: I also have to pay CHMC of approximately $1200.00.

Both considerations are grouped together because they involve debt consolidation. Again, the appraised value may end up calling the shots here and as I said before, the difference in the payments, should you decide to include the two amounts in your mortgage.

I provide a fantastic tool, free of course, using a mortgage loan payment calculator at my other website, Prime-Real-Estate-Articles.com. You'll find more ways to have fun and save money calculating monthly house payments.

Near the bottom of this page, I have provided links to uncommon refinance information to answer more mortgage refinancing questions. By all means, please let me know if you have more questions.

Take a moment to bookmark Mortgage Refinancing Questions to your favorites and visit often for more mortgage and refinance tips. Irene, you can also invite friends to comment on this page or ask another question of their own like you did.

Best Wishes,

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