When was the last time you really thought about your mortgage? If it’s been a while, now is a good time to check up on how faithful your mortgage financing has been to you.
Are you about halfway into your mortgage term? It’s a good time to think ahead. There has been talk of rate increases for a while and we are not expecting rates to go any lower. Now may be the time to break your term early for one reason or another. Look at your options sooner rather than later.
You may be looking at refinancing to access some of your home equity, consolidate debts, or if you are payment-sensitive and just can’t afford a payment increase due to rising rates, it’s a good time to explore your options. It could very well make sense to make a change now versus waiting for your renewal date when the rates could be significantly higher.
Fixed rate mortgage
Do you have a Home Equity Line of Credit and the balance isn’t going down as fast as you’d like?
Consider converting your revolving credit line into a fixed rate mortgage term. Not only will you secure a lower rate, it will also provide you with a fixed payment schedule and amortization period that will be a positive step to paying it off in full.
Have your circumstances improved?
Has your credit improved since you originally got your mortgage?
If you originally secured your mortgage when your credit was not up to par and are paying a higher rate as a result, you are most likely eligible for a lower interest rate which will result in huge savings and a lower payment each month.
Employment changes
Mortgage qualification is more difficult when you are newly self employed. If you are planning to make some changes to your mortgage it makes sense to do so before you make the change to self employed and while you are still able to qualify for the best rate available. You may want to restructure your mortgage for a lower payment or perhaps use your equity as a cushion while you are building your business. If you are already self employed and want to make some changes there are still options available for you.
Ready for a complete change?
Are you simply ready to move up? Most mortgages are portable, which means you can take the rate and terms of your mortgage with you to your new home. Is that your best option or is a new mortgage with a new rate and terms a better option?
The ideas above will lead to questions with regards to possible payout penalties. Will a change actually benefit you at this time?
A quick analysis from a mortgage professional will provide you with an amortization scenario taking into consideration potential payout penalties to break your term and determine if it is a financially sound idea to move forward with an adjustment to your mortgage.
