Renewing Your Mortgage: What You Need to Know
The basics for how mortgages work are: you apply for and obtain a mortgage through a financial institute (typically a bank or credit union) that has a set term length for a specific period of time, known as the “mortgage term.” This term can range from a few months to several years. Then at the end of each term, you must renew your mortgage unless you pay off the balance in full during that set term. Renewing your mortgage can be a stress free task with the right knowledge and support.
Here are a few things you might need to know about renewing your mortgage.
Your Renewal Statement
If your mortgage is with a federally regulated financial institution, (the fancy way to say “a bank” or “credit union”) the lender must provide you with a renewal statement at least 21 days before the end of the existing term that was chosen when you originally applied and were approved for your mortgage.
This statement will include the following information:
- The remaining principal balance (This does not include what you will pay for interest over the length of your mortgage term)
- The interest rate
- The payment frequency
- The term (A.K.A the length of your mortgage)
- Plus, any charges or fees that apply
The renewal statement must also specify that the interest rate offered won’t be eligible for a possible increase until your renewal date. As most know, interest rates tend to fluctuate, so you can prepare yourself ahead of time by keeping that in mind when it comes time to renew your mortgage. It’s also possible at that point to receive a mortgage renewal contract with your renewal statement as some banks like to make it easier for you to renew.
Review Your Mortgage Needs
When your mortgage term comes to an end, it’s a good time to review your mortgage needs and ensure you have the right mortgage product for your specific situation – to make sure that your mortgage is actually working for you!
Here are some questions to consider when it is time to renew:
- Can you increase your payments to pay off your mortgage sooner and save on interest?
- Do you want to change your payment frequency?
- Are you likely to make additional payments?
- Are you satisfied with the services offered by your current lender?
- Do you want to consolidate other debts with higher interest rates and increase the amount of your mortgage?
- Do you still need optional life, critical illness, disability, or employment insurance?
There can be a lot of different life factors to consider when it comes time to renew your mortgage, which leads me to my next point, and possibly the most helpful option available to you during the mortgage renewal process.
Using a Mortgage Broker
One of the best ways to find the best mortgage options for you is by using a mortgage broker. A mortgage broker is a licensed professional who can help you find the right mortgage product from a variety of lenders. They work on your behalf to negotiate the best terms and rates for your situation. Which means that you can release some of the stress that naturally comes with trying to figure out your mortgage needs because your mortgage broker is there to help you make sense of it all – Can you say thank you mortgage superhero!!
Not to mention, mortgage brokers have access to a wide range of lenders, including banks, credit unions, and private lenders. They can help you compare different mortgage products and find the one that best fits your needs and budget.
As a mortgage broker I can help you navigate the mortgage renewal process. I can review your renewal statement, explain your options, and help you make an informed decision about everything to do with your mortgage renewal. After 20 years of being a mortgage broker you can trust that I know my way around mortgage renewals and have your best interests at the heart of everything that I do.
It can be confusing to comb through all of the information included when it comes time to renew your mortgage but it is an important part of managing your finances and your financial stress load.
With that in mind, my team and I are always ready to help you with any of your mortgage needs and of course we are more than happy to answer all of your mortgage questions. Please reach out today at 403-875-2969. We are looking forward to helping you!