Over the life of a mortgage, it’s typical that at some point home owners will have to renew at a higher rate when mortgage terms come due. But for the past few years, homebuyers and owners have been able to take advantage of the lowest mortgage rates in history.
Of course, this extended low interest environment isn’t going to last forever, which is why renewals occurring through the rest of this year are critical. Now is definitely a fantastic time to renew your mortgage early before rates inevitably start rising.
Banks will usually send homeowners a notice a few months before their mortgage term expires in order to get their clients to lock in to another mortgage term before they start shopping around with other lenders. They might even give you a call or two to get you to sign up early.
Don’t ignore these calls or letters: if you’ve got a mortgage coming due within the next six months, respond. When it comes to talking to the bank about an early renewal at a ridiculously low rate, you can save a lot of money.
With today’s record-low fixed rates, mortgage holders that have renewals approaching their due date within the next 4 to 6 months can take advantage of securing a fantastic mortgage rate.
As of October 17, the variable mortgage rate is 2.625 percent, and fixed rate is 3.750 percent as per the Bank of America.
There’s no way you won’t find a great deal on a rate these days. That is, of course, if your credit is in decent shape. Early renewals can be one of the easiest of mortgage transactions. Once you get out of your mortgage after it expires without cost or penalty, you can slide right into a new mortgage with the same lender.
Early renewals usually allow you to lock in at a new rate 2 to 4 months ahead of when your mortgage is actually due to mature.
In fact, this year, about 60 percent of people who were due to renew their mortgage did so in advance of the maturity date. While the majority did it within 3 months of renewal, a good number of them signed on as early as six months ahead of maturity.
Depending on what your rate is right now, locking in at current rates can realistically put a lot of money back in your pocket over the term of your mortgage.
Reducing your mortgage rate right away is a solid reason to lock in before any rate increases come – and they will. Even if rates increase later than anticipated, it’ll still happen. And if you renew early, you’re covered.
If you’re planning to live in your current home for at least five years or more, and don’t think you need to refinance or break your mortgage, then perhaps an early renewal through your current lender is fine. However, if there’s a remote possibility of breaking or refinancing your mortgage and still put money in your pocket, then an early renewal will give you an opportunity to look somewhere else for a better term.
Of course, we’re talking about the penalties that banks charge to those who break their mortgages before they come up for renewal. While it’s true that lenders charge penalties when homeowners break their mortgages early, it might be worth sucking up the cost in favor of an early mortgage renewal and locking in at a significantly lower interest rate.
Mortgage renewal statements mean it’s time for mortgage holders to speak with the bank to discuss current rates and terms. And today is a good day to do just that.
