Is it time to take a look at your mortgage?
What to think about before your annual mortgage review
Whether you’re looking to pick up the pace on paying off your home or want a more stable option, it’s the perfect time of year for your annual mortgage review. 2019 has been the year of the mortgage refinance and an increase in the value of homes, and mortgage rates may have changed since you purchased that home. And chances are you’ve had some changes in your life since you closed on your place. What may have been particularly attractive to 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?
If you’ve built up an 80% loan-to-value (LTV), switching to a conventional loan could provide the opportunity to eliminate your mortgage insurance. Just think of what you could put that money toward, like renovations you’ve been putting off, college tuition, retirement funds…the list is endless.
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, you opted for a little uncertainty in turn for a lower rate and an ARM was a great option at the time. But...when is your ARM set to adjust, and do you know what the new rate will be? Before you sit back and let your ARM adjust, 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 have a child or another child in your future?
Now that you have a family to consider, maybe 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. With all these added costs in your life, you might want a little financial stability.
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, you might want to explore a fixed rate.
Are you currently paying on a jumbo loan?
An ARM can be a desirable option when you’re first signing on a jumbo loan, primarily as a way to keep your monthly payment manageable. But it’s also 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 adjusted rate.
If you answered yes to some of these questions, you may want to consider your options and make sure you’re still benefiting from your current mortgage. To get started, discuss your financial goals, assess your home’s current value and speak with a licensed loan officer.
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