We have been blessed with low-interest rates affecting lower mortgage rates. Have you thought about what happens to mortgage rates and how a household’s expenses go up when these rates rise?
Some mortgage thoughts to ponder:
- Variable mortgages. Variable-rate mortgages can be a good option when facing declining rates in the short term. And they can be risky if rates rise. Ask your mortgage advisor what mortgage plan suits your needs?
- When it’s time to renew your mortgage. Consider that you have a chance to work with an independent mortgage expert to save money. Watch for the letter that tells you it is time to renew, or your notices coming in from your financial institution.
- Pay your bills and credit cards on time. Even phone company bills not paid can end up on your Equifax report. When applying for a new mortgage, your lender can see your credit score just when you need to appear in good standing as a responsible borrower.
- Don’t apply for credit everywhere. Avoid signing up for store credit cards because such applications trigger a credit inquiry. Too many inquiries make it look like you may be strapped for cash flow.
- Mortgage HELOC debt versus total debt. High-interest debt can be rolled into your mortgage if the interest rate is lower than your other loans. Plus you may be able to include renovation costs in your new mortgage. Just be careful not to increase your HELOC (home equity line of credit) ratio close to your home’s value. There is always a temptation to use up your equity. Note: Talk to your mortgage advisor about the pros and cons of raising HELOC debt tied to your home if home values decrease dramatically, or when bankruptcy occurs.
- Know your mortgage prepayment penalty. To get out of your mortgage early, the right mortgage with a lower penalty could save you a lot of money! Compare these penalties when shopping for your new mortgage with your mortgage expert.
- View mortgage pay-downs as an investment. A pay-down will pay it forward into your net worth. Thus prepayment privileges are important! If you make monthly payments, consider paying your mortgage weekly or biweekly to reduce the amortization period.
- Give your mortgage an annual checkup. Keep your mortgage healthy – give it an annual checkup. Even a minor tweak can better position your real estate planning.