Time to give your mortgage its annual checkup
As we start approaching the end of 2020, with all of the changes we’ve all experienced this year, now is the perfect time of year for your annual mortgage review. Rates have been hovering around historic lows, so it’s likely that if you haven’t already refinanced now is a great time for a mortgage checkup. No one is sure when rates may start to tick back up, so the sooner you can complete it and make any changes, the better.
Chances are you’ve also had some changes in your life since you closed on your mortgage. What may have worked for you as a first-time home buyer might not be your best option anymore. Here we’ll offer some loan alternatives to consider.
Do you have a Federal Housing Administration (FHA) loan*? You may want to consider refinancing to a conventional loan.
Has the value of your home increased since you originally purchased? As the value of your home increases, so does your equity. You could use this increase in home value as leverage to successfully refinance and potentially lower your monthly mortgage payments.
Are you currently paying mortgage insurance?
Depending on your loan, If you’ve built up enough equity, switching to a conventional loan could provide the opportunity to eliminate your mortgage insurance. That could potentially be a few hundred extra in your monthly budget, which you could use for renovations, student debt, retirement, monthly expenses…anything.
If you currently have an Adjustable Rate Mortgage (ARM), you might want to consider refinancing to a fixed rate.
When you originally purchased your home, if you traded a little uncertainty for a lower rate with an ARM, now is a great time to get that certainty back. Depending on when you closed on your home, you may be able to find a rate today that you would have only found in an ARM back then.^
But first ask yourself: when is your ARM set to adjust, and do you know what the new rate will be? Don’t just sit back and let your rate change—you’ll definitely want to investigate what your adjustment will look like and what other options are available to you.
Since you originally purchased your home have you gotten married or welcomed a new baby? Are you planning to add to your family in the future?
When you have a family to consider, you want a mortgage that’s less risky. You have enough to think about now, like one day paying for college for the kids or opting for a family-friendly vehicle. Not to mention all the expenses that seem to pop up on a monthly basis when you have kids. With all these costs in your monthly budget, you might want to know that your monthly mortgage costs won’t pop up as well.
Are you planning on staying in your current residence for more than 5 years?
ARMs can be a great option if you know you’ll be moving or refinancing within the time frame of your current rate. However, if you’re planning on keeping your current home as your forever home—or just for more than the length of the ARM—you might want to explore a fixed rate.
Are you currently paying on a jumbo loan?
An ARM can make sense when you’re first committing to a jumbo loan, primarily as a way to keep your monthly payments manageable, but it can also be a risky move as more money is at stake. Before it’s time for your rate to adjust, make sure you’ll be able to afford the new rate.
If you answered yes to some of these questions, you may want to consider your options and take advantage of today’s low rates. To get started, discuss your financial goals, assess your home’s current value and speak with a licensed loan officer.
*Proper Rate, LLC is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Proper Rate for current rates and for more information.
Savings, if any, vary based on consumer’s credit profile, interest rate availability, and other factors. Contact Proper Rate, LLC for current rates. Restrictions apply.