How to Prepare for the Mortgage Renewal Process
At the conclusion of your mortgage term, if you still owe a balance on that property, you will need to renew the mortgage for another term.
This is also an opportunity to evaluate your current mortgage and compare it with any financial goals you may have recently set.
Your current mortgage provider will notify you of the upcoming renewal in the mail with a slip that you can sign back, but if you want be sure that all of your needs are properly met, you need to take a proactive approach when thinking about your mortgage renewal.
Why You Should Start the Mortgage Renewal Process Early
First of all, begin the process of shopping for your mortgage renewal several months before the term is up.
Approximately, four months before your renewal date many lenders will let you initiate the early mortgage renewal process. This could also assist you with avoiding a pre-payment penalty.
Reevaluating Your Financial Situation
You can also begin researching your options online during this time. Plenty of different things can happen with regard to your financial situation over the course of a mortgage term.
The financial goals that you have at the beginning of your mortgage term may no longer identify with your goals today. You might have retired, lost income or received a raise at work.
Make sure that you have considered all of these individual needs when evaluating a mortgage rate, product and term. Ask yourself the following questions in order to identify what you are looking for in a mortgage product when it is time to renew:
- Will you be able to pay off the mortgage entirely in the next term?
- Will you receive any additional funds like inheritances or bonuses that could be put towards your mortgage payment?
- Do you have room in your budget to increase your payment amount on your mortgage?
- Do you have any intention of borrowing more money from your lender over the course of this next term?
Being Ready to Renew Within 30 Days
The final stage of preparing for the renewal process is being ready to renew in the final thirty days.
Your lender has to send you a renewal statement, a minimum of 21 days before the term is up, but you will usually receive a renewal offer with their lowest posted rate, approximately 30 days before the maturity.
When it’s Time to Make a Decision
After you have considered your financial goals, outlined your needs and asked yourself critical questions; it is time to make a decision. Identify whether or not your current lender or another lender is offering you the best mortgage rate and product at this particular period in time.
Although there will be some paperwork involved in switching providers, you may be eligible to access better mortgage rates by doing this.
Your new lender’s qualifying criteria may be separate from your current lenders, so be prepared to do the research in advance so that you know what to expect.