Mortgage Refinance vs Mortgage Renewal?

Guest 0.10 Dollars($)

Hello everyone.

I was wondering if there a difference between mortgage renewal and mortgage refinance.

I know that renewal is when the statement is mailed from the bank, at which point the mortgage is pretty much over.

Mortgage refinance(at least from my research) is done whenever(as long as its allowed by lender).

So i was wondering if I was correct.

Also heard a so called "not cost" switch for the renewal where bank takes care of the fees.

Does this apply for the refinance?
Is renewal and refinance similar in process?

Would appreciate your answers!!!

gmakerley · Posted: Wed Apr 16, 2008 7:31 am Post subject:

i am unfamiliar with renewals; further, your statement "renewal is when the statement is mailed from the bank, at which point the mortgage is pretty much over" is very confusing to me. i can't figure out what you are addressing there.

as for refinancing, a borrower may seek a refinance of a property at almost any time, though most lenders like to see at least a preliminary history of payments before the first refinance.

as for costs, you will encounter similar costs in refinancing as you did at the time of purchase - there are still legal fees, escrows to be established and collected, appraisal and credit fees, etc. depending on how the interest rate is structured, sometimes the costs are rolled into the loan amount and therefore, not coming out of your pocket.

please try to clarify where you heard about "renewal" so that might be addressed more clearly.

Guest 0.10 Dollars($)

Thanks for the answer George.

By Renewal I mean the time when the mortgage expires(matures). Lets say I had a 5 year fixed loan. 5 years past and now its time to renew it.

Let me give you an example: alexandermacleod.com/default.aspx?PageID=1002

"as for refinancing, a borrower may seek a refinance of a property at almost any time, though most lenders like to see at least a preliminary history of payments before the first refinance."

OK. Now i understand the difference. thanks!

Have another question thou:

Once mortgage matures, how much does it cost to get another one(renew)?

I've seen a couple of banks offer what is called a "no-cost" switch where they absorbed the cost associated with the transfer. How real is the offer? Want to make sure they arent adding to the principal.

gmakerley · Posted: Wed Apr 16, 2008 8:50 am Post subject:

i'm still having trouble with the concept of a renewable loan. if the term is 5 years, it's 5 years in my mind; meaning, the loan must be paid in full at that time. for instance, you can get a 5-year term with payments based on a 30-year payout, with a "balloon" payment of the remaining balance due at maturity. what you describe doesn't fit that knowledge that i have.

at any rate, you're asking about the bank absorbing the costs of taking over your loan. i find this highly suspect. i would imagine that what they are talking about is rolling your costs into the new loan, thereby increasing your debt (not necessarily a bad thing, as long as you know what you're getting into).

if these banks are truly that generous and are paying all the vendors, etc. out of their own pockets, then you ought to run and not walk to the closest branch and sign up immediately.

your other question concerning how much it costs to obtain a new mortgage is a difficult one to answer. this varies from one lending institution to another, and there can be a wide variation. further, you will find that lower rates mean more fees and higher rates mean lower fees, as a rule.

i'm hoping that, despite my confusion, i've been helpful here.

0.10 Dollars($)

Hmm. thanks for the effort George i guess i mess up the question in the first place.

My knowledge is very limited, so the i based the question on information from a number of lenders. Here's what this site states:

canequity.com/mortgage_renewals.stm

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Guest 0.10 Dollars($)

Ok my apologies, i confused myself.

Thanks for the help though! Good luck!

gmakerley · Posted: Wed Apr 16, 2008 1:44 pm Post subject:

no wonder i didnt get it, ivan...i deal strictly with loans within the united states and not canada. i'm sure their laws and rules are substantially different from ours.

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