With a majority of homeowners facing mortgage renewals in the next 12 to 24 months, now is the time to prepare. When your mortgage term ends, your lender will send a renewal letter with new terms and interest rates. While it may seem convenient to sign and return the offer, doing so without reviewing your options could mean paying more than necessary.
Many lenders do not automatically offer their best rates upon renewal. Instead, they often present a higher rate, assuming borrowers will renew without comparison shopping. This is why speaking with a mortgage professional before signing is essential.
If your mortgage is up for renewal soon, here’s what you need to know to secure the best deal.
Why You Shouldn’t Automatically Accept Your Renewal Offer
Lenders rely on customer inertia—the assumption that many homeowners will accept renewal offers without questioning the terms. However, taking a few proactive steps before signing can save you thousands of dollars over the life of your mortgage.
Here are a few reasons why reviewing your renewal options is crucial:
- Lower rates may be available elsewhere. Shopping around allows you to compare rates and secure the most competitive offer.
- Your financial situation may have changed. If you now qualify for a better rate due to an improved credit score or increased home equity, you could negotiate better terms.
- Lenders may offer discounted rates to retain clients. If you show that you’re considering other lenders, your current provider may offer a more competitive rate to keep your business.
Understanding Current Mortgage Rates and Your Options
As of this week, here’s a breakdown of current mortgage rates:
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These numbers highlight the potential savings when comparing rates rather than simply renewing with your current lender.
Steps to Take Before Renewing Your Mortgage
1. Start the Process Early
Your lender typically sends a renewal letter 30 to 60 days before your term ends, but you should start reviewing your options four to six months in advance. This gives you time to compare lenders and negotiate terms.
2. Compare Interest Rates and Loan Terms
Interest rates fluctuate, and a lower rate can mean thousands of dollars in savings over time. Consulting a mortgage broker can help you assess various lenders and mortgage products tailored to your financial situation.
3. Evaluate Your Financial Goals
Consider how your financial situation has changed since your last mortgage term. Would switching to a shorter amortization period help you pay off your mortgage faster? Would a variable rate be a better fit based on market conditions? Reviewing your long-term goals ensures you make the right decision.
4. Negotiate with Your Lender
Many homeowners don’t realize that renewal rates are often negotiable. Lenders want to keep your business, and if you have a competitive offer from another institution, they may be willing to match or beat it.
5. Work with a Mortgage Professional
A mortgage broker can navigate the complexities of mortgage renewal, ensuring you receive the best available rate. They have access to multiple lenders, allowing them to find exclusive deals that may not be advertised publicly.
Why Working with a Mortgage Broker is Beneficial
While you can negotiate directly with your lender, a mortgage broker offers added advantages:
- Access to lower rates from a wide range of lenders.
- Expert guidance tailored to your financial situation.
- Simplified paperwork and application process, reducing stress and saving time.
- Ability to compare offers objectively to find the best deal.
Get Expert Advice Before You Renew
Your mortgage renewal is an opportunity to reassess your financial goals and secure the best possible terms. By taking the time to compare rates, negotiate with lenders, and consult a mortgage professional, you can avoid overpaying and maximize your savings.
If you or your clients are approaching mortgage renewal, do not renew without exploring all options. Call Sanjay Sukdeo today for expert real estate and mortgage guidance.
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