What does it mean to renew a mortgage?
If the home loan is “in-escrow” it can take up a noticeable chunk of mortgage monthly payments. Property taxes are based on the worth of a home or land. If the property is undervalued it will cause the taxes to be high.
As a homeowner, one can request a home tax assessment to be done again. If approved, homeowner taxes will be reduced along with monthly mortgage payments.
What does It mean to renew a mortgage?
When you secure a mortgage, you probably never thought about the renewal process as there is a lot of paperwork involved in getting approval for a mortgage.
You have signed your mortgage papers by agreeing certain terms on your loan like interest rate, period of mortgage etc.
The renewal of a mortgage occurs when your initial terms come to an end and now you can renegotiate your mortgage terms like period of mortgage, interest rate and even lender itself. This gives an opportunity to the borrower to align his mortgage terms according to his needs.
Is it worth renewing my mortgage?
1. Your Net Income
The probability is that your net income will be much better now as compared to the time you have bought the mortgage. So, while signing new terms you can ask the lender to increase your monthly payments and this way you will get debt free fast. The other side of the coin is that your expenses have increased now because of children or any other reason then you can lower your monthly mortgage payments and live your life comfortably.2. Your Financial Goals
While renewing your mortgage, you should also consider your financial goals as well and the mortgage product that your current broker is providing supports your financial goals. To cite an example – If your current mortgage term is for 6 years and the next mortgage renewal terms will likely be 6 years too but what if you are moving to another city within the next two years. In that case, you can opt for a two year mortgage product. Another thing you can consider is HELOC – Home equity line of credit as your home also increases in value and has equity build up into it which can be utilized to lower mortgage rates.3. Shop for Mortgage Rates
Another thing you can do while renewing your mortgage is to shop for better rates. You can negotiate with your existing mortgage institute or shop for new mortgage rates in the market. Suppose you have a mortgage of 300,000$ for 20 years and on a 2.74% interest rate your monthly payments will be $1,595.56 whereas on 2.94%, it will be $1,652.13. The 0.20% cut in interest rates will save you around 57$ a month or 684$ a year. If you are looking for the best mortgage renewal services at best rates, then do give us a chance.4. Start Shopping Early
“Early bird gets the worm” this phrase fits well when you are looking to refinance your mortgage. While your existing mortgage broker will send you the refinance notice 30 days prior, it is advisable that you start shopping for mortgage rates at least 120 days before the date of renewal. This gives a chance to the other mortgage broker to do the paperwork and you get enough time to shop for best rates available in the market. You can find your maturity date on the mortgage contract and act according to it.5. Look for a Good Lender
If you decide to switch lenders then, It takes time to find a good lender. So, you should start looking for lenders as soon as possible..Is renewing your mortgage the same as refinancing?
Renewing and refinancing a mortgage are two different things. In mortgage renewal, the borrower can renew the old terms of the mortgage and set new terms on the pending loan.
On the other hand, in refinancing all your debt is consolidated and a new loan is issued which replaces the old loan. Refinancing helps you in accessing the hidden equity of your house or to get a better rate. Refinancing is helpful to homeowners to merge these high interest debt into a manageable secured debt. This will help if you are doing home renovation or paying your kids to college.
How early can a mortgage be renewed?
You are qualified to renew your mortgage loan as early as 4 months or 120 days before maturity. This is also skinwn as early mortgage renewal and many lenders offer discounted interest rates on early renewal of mortgages.
Do banks check credit for mortgage renewal?
- Mortgage renewal letter copy
- Income proof
- Proof of home ownership
- Property insurance proof
It may take a mortgage lender a week to view your application and suggest you the best mortgage product. Starting early will give you time to compare the different terms otherwise you will sign your mortgage application with your old lender on the same terms.
Alpha Mortgage House Corporation is a Mortgage Broker in Surrey, BC. We provide mortgages for Home Purchases, Project financing, Second mortgages, Commercial mortgages, Mortgages for first-time home buyers and more. Alpha Mortgage is a one-stop solution for all your mortgage needs. Our team works with top lenders to provide you with the best financial options.