Hey friends, it's Eli with Century 21!
We all know that interest rates are super low at the moment, but your mortgage doesn't renew for another six months or so, and you're thinking "dagnabbit! I hope the interest rates stay this low for when I have to renew my mortgage!"
Well, the interest rates are on the rise folks.
You will have to renew your mortgage by the time your mortgage term ends and your lender will send you a mortgage renewal notice at least 21 days or so before the term is up.
However, whether you decide to stay with the same current lender or you switch to a different lender for a better rate, you should be on the ball and do some homework.
Did you know that lenders may allow you to renew your mortgage early within 121 days to 180 days prior to your renewal date without a penalty?
But don't be alarmed if a lender does not offer you an early renewal date not all lenders offer early renewals.
The only time an early renewal is beneficial for Borrowers is when you are in an increasing rate environment, that's because the existing lender is essentially saying "I'll renew your mortgage right now at a current rate before the rates go up"
Whereas, if you want to get a current rate with any other lender right now, you will have to pay a penalty to break the contract with the existing lender.
Now, if you're concerned that interest rates will increase locking in a low interest rate early will help reduce the risk of having a higher interest rate your mortgage term is up, but the benefit of early renewal depends greatly on the rate being offered.
If the renewal rate is lower than your current rate, or the anticipated future rate, renewing early can potentially help you save money.
So I mentioned this to someone that I know and she was at 3.5% or so, her lender allowed her to renew within three months prior to the end of her term and she was able to take advantage of the new lower rate and received 1.49% and she locked that baby in for another five years!
At those interest rates, you can probably pay close to around $100,000 down on your mortgage instead of only about $50,000 at the higher interest rate.
So, of course, there are lots of variables with these numbers but you get the idea, right?
You'll save lots of money on your interest.
Locking in a mortgage rate early may come at a cost such as you know, an extra 10 or 20 or 30 basis points on your new locked-in interest rate, and if interest rates end up dropping before your mortgage term is up, then locking in a rate early on could mean missing out on better rates.
So it is a little bit of a gamble that you have to choose and decide.
Since you don't have to stick with the same lender for your mortgage renewal it is worth shopping around and exploring your options starting around maybe 120 days or so, or four months, before the end of your mortgage term.
When shopping around and weighing your options you can find the best mortgage rate, or mortgage product, to help you save money and complete the paperwork in time to switch to lenders on your mortgage renewal date.
I'm by no means a mortgage broker or specialist so please contact your trusted mortgage professional for more information and the best advice that fits your needs.
The bottom line is that when deciding on an early mortgage renewal, it's important to weigh the options, the cost, and benefits to see if it's worth it and a mortgage professional can help you make that easier.
So, find the best mortgage product for your financial situation, your lifestyle, and your future goals.
Hope this was helpful guys.
Thanks so much for watching!
PS: If you’d like to learn more about how I can help you navigate through this unique market, text me at 778-256-2888.
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