A mortgage renewal is a relatively new agreement that lets an individual renew, extend or renegotiate their current mortgage plan. It also gives them the ability to change to a different lender! Mortgage renewals present the borrower with a perfect chance to reassess his or her current mortgage plan and decide if the borrower should switch to another lender. Here are 3 things that one must know when a mortgage term is about to expire!
The interest rate of the current mortgage agreement should be the deciding factor on whether the borrower should stay or jump to a new lender. Borrowers should research on the interest rate that other lenders are offering and should consider to borrow from them if the interest rate is lower, thus enabling the borrower to pay less.
The borrower can also request for a decreased interest rate from the current lender, as most lenders are willing to decrease their interest rate rather than losing a client.
The interest term basically states the percentage of the interest for a duration that is stated in the contract. Borrowers should find long interest terms with low interest rates compared to short interest terms with moderate to high interest rates.
The rationale here is that the rates may not go much lower if it was already low in the first place with regards to a low interest long term plan, but the rates may go even higher even though they may already be high with regards to a high interest, short term plan.
It is important to take note that some lenders charge an application fee as well as an appraisal fee if a borrower jumps ship when they have to renew their mortgage loan. This is because the borrower is basically signing up for a new loan! It is thus important to do ample research on any requested fees as they do add up and may cancel out any potential savings the borrower believed that the new plan will bring.