10 THINGS TO CONSIDER BEFORE YOUR MORTGAGE RENEWS – part one
Marci • September 12, 2012
You spent a lot of time choosing your home, negotiating the price and arranging your mortgage. Buying a home is a big deal! For most of us, it’s the largest expense we will ever take on. But, have you thought about your mortgage’s renewal? More than just a discussion about the current rates and trends, your renewal needs almost as much thought as the initial mortgage.
Here is the first half of a ten point thought-starter to get you prepared and comfortable before that renewal notice arrives in the mail.
- 1. Explore your options and ask for a second opinion.
When you receive your renewal statement, it’s incredibly easy to check the boxes and sign on for another term. While this may make sense for some, your family or financial situation may have changed. There may be other options that better meet your current needs.
There’s also the question of whether that renewal form reflects the best rate from your existing mortgage provider. Let’s shop the entire Canadian mortgage market so you can compare what was offered to you to ensure it is competitive and fair. After all, haven’t you earned the best possible rate based on your loyalty to them for the last few years? Remember, you don’t have to renew with the same lender.
- 2. Think about your payments.
If you’ve been feeling financially strapped each month, it could be time to reduce your mortgage payments. On the other hand, if you’re earning more, why not pay down your mortgage faster and save thousands of dollars in interest over time?
- 3. Do you need cash flow for other things?
Your priorities and cash flow needs may have shifted since your last mortgage discussion. Things like paying for a child’s university education, planning a career change, or buying a vacation property may call for spending money on things other than your mortgage. You may be able to refinance to take this into account.
- 4. Can you handle fluctuating rates?
Some homeowners are uncomfortable with increases in interest rates, while others prefer to go with the flow. Rates are tough to predict. It’s best to base your decision on your personal situation, not what you read in the news, and tailor your mortgage to your needs. I can help you decide on fixed or variable rates so you won’t lose any sleep over your decision!
- 5. Will you sell soon?
If you are likely to sell soon, a shorter-term mortgage or one that has flexible terms will save you in penalties if you sell your house before the mortgage comes due.
Stay tuned for the next five points to consider before your mortgage renews.
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Thinking of Buying a Home? Here’s Why Getting Pre-Approved Is Key If you’re ready to buy a home but aren’t sure where to begin, the answer is simple: start with a pre-approval. It’s one of the most important first steps in your home-buying journey—and here's why. Why a Pre-Approval is Crucial Imagine walking into a restaurant, hungry and excited to order, but unsure if your credit card will cover the bill. It’s the same situation with buying a home. You can browse listings online all day, but until you know how much you can afford, you’re just window shopping. Getting pre-approved for a mortgage is like finding out the price range you can comfortably shop within before you start looking at homes with a real estate agent. It sets you up for success and saves you from wasting time on properties that might be out of reach. What Exactly is a Pre-Approval? A pre-approval isn’t a guarantee. It’s not a promise that a lender will give you a mortgage no matter what happens with your finances. It’s more like a preview of your financial health, giving you a clear idea of how much you can borrow, based on the information you provide at the time. Think of it as a roadmap. After going through the pre-approval process, you’ll have a much clearer picture of what you can afford and what you need to do to make the final approval process smoother. What Happens During the Pre-Approval Process? When you apply for a pre-approval, lenders will look at a few key areas: Your income Your credit history Your assets and liabilities The property you’re interested in This comprehensive review will uncover any potential hurdles that could prevent you from securing financing later on. The earlier you identify these challenges, the better. Potential Issues a Pre-Approval Can Reveal Even if you feel confident that your finances are in good shape, a pre-approval might uncover issues you didn’t expect: Recent job changes or probation periods An income that’s heavily commission-based or reliant on extra shifts Errors or collections on your credit report Lack of a well-established credit history Insufficient funds saved for a down payment Existing debt reducing your qualification amount Any other financial blind spots you might not be aware of By addressing these issues early, you give yourself the best chance of securing the mortgage you need. A pre-approval makes sure there are no surprises along the way. Pre-Approval vs. Pre-Qualification: What’s the Difference? It’s important to understand that a pre-approval is more than just a quick online estimate. Unlike pre-qualification—which can sometimes be based on limited information and calculations—a pre-approval involves a thorough review of your finances. This includes looking at your credit report, providing detailed documents, and having a conversation with a mortgage professional about your options. Why Get Pre-Approved Now? The best time to secure a pre-approval is as soon as possible. The process is free and carries no risk—it just gives you a clear path forward. It’s never too early to start, and by doing so, you’ll be in a much stronger position when you're ready to make an offer on your dream home. Let’s Make Your Home Buying Journey Smooth A well-planned mortgage process can make all the difference in securing your home. If you’re ready to get pre-approved or just want to chat about your options, I’d love to help. Let’s make your home-buying experience a smooth and successful one!
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