Is your mortgage up for renewal? Should you let it automatically renew? Change your lender? Try and tweak your mortgage terms. Before you dive into making that decision, let’s think about it for a moment. Mortgage rates are high right now, so having a financial game plan could save you thousands of dollars on your mortgage and this is what I recommend you do to prepare.
Start shopping around for better rates BEFORE your mortgage term ends
You will get a notice from your lender that your mortgage term is coming to an end. You don’t want your mortgage to auto-renew with the rate you had previously without looking into better interest rates first. Why pay more money when you don’t have to?! Try negotiating with your current lender to see if they will offer you a better rate or put in a call to a mortgage broker. They may be willing to work with you to keep your business but if not your mortgage broker can help you look into different lenders (especially if your previous rate is from the bank) which could help you save you a good amount of money in just a few short years.
And remember, this can’t necessarily be done in one day, so plan to start early so you have more time to find the best rate and complete the necessary paperwork before that renewal date comes up.
Know that when interest rates are high, a shorter mortgage term may be the best option
You need to decide how long of a mortgage term you want to lock in. With a shorter mortgage term, you’ll typically receive a lower interest rate than you would with a longer term which can result in significant savings over the lifetime of your mortgage loan. The higher interest rates we see in March 2023 should start to come down in a year or two so locking in at a current higher rate for a longer term might not be as smart of a financial move for you. No one can play the market per se but, with my experience having worked in the mortgage industry for years it’s not likely they will climb much higher before they start to come back down as the economy regulates.
How much do you owe on your mortgage?
If you only have a couple of years left on your mortgage, it may make sense to take a shorter mortgage term and pay off the principal of your mortgage faster so you can avoid paying high-interest rates any longer than you need to. Or if you have the means to pay off more of your mortgage principal in lump sum payments now might be the time to do so. On the other hand, if you have 20 years still left on your mortgage, then renewing your mortgage for a 1 or 2-year term now so you can take advantage of lower interest rates when that next renewal comes up could be a smarter move.
Investigate all your options to find the lowest rates when renewing your mortgage
Do your homework to get the best credit score possible prior to applying for your renewal and talk to a mortgage expert to find out what options and rates you could be taking advantage of. Working with a mortgage broker is free and oftentimes gives you a leg up on your mortgage application. Your broker will spend more time helping you get approved for the mortgage you want instead of just running the numbers as the banks do.
Ultimately, the best mortgage option for you will depend on your financial situation and goals. Unlike a bank or credit union, mortgage brokers work with multiple lenders. That means I can give you access to a wider range of mortgage products and interest rates than you may be able to find on your own. Plus, I can negotiate with lenders on your behalf to help you find the best possible rate and terms to save you time and money. Let’s get started on your mortgage renewal today — Sign up for a free consultation now or call me, Darren Robinson, at 705-315-0516 and let’s talk about your next steps.