Thursday, April 7, 2011

Mortgage Renewal Letter

Everyone who has a mortgage receives one of these approximately 3-6 months prior to the end of their mortgage term.

It is probably not a good idea to sign it and send it back.  Rarely will a Bank send you the best available rate.  It is always good to bring your letter to our office or call us so we can get you a discount rate. 

Keep in mind the amount of money you can save.  With even a small discount of .3% on a $200,000 mortgage  for a five year rate amortized for 25 years can save you $35.30 a month or $2,118 over 5 years.  Quite often the discounts are much larger, as banks really are not interested in saving you money.

Keep us in mind when you do receive those letters.  The cost associated with a switch is quite minimal.  There is usually a discharge fee around $200 and we cover this cost for our clients.  If the mortgage is not default insured there may be a $300-400 appraisal, which is worth it if you are going to save thousands.  A lawyer is not required.

If you have a 40 year mortgage you can still switch to a different lender.  The default mortgage insurance you paid is good for the remainder of the amortization and comes with you when you switch lenders.

If you have already mailed in your renewal letter, it will cost you about $1,000 in legal fees to get out of the deal prior to your renewal date.  This may be worth it if you are saving thousands of dollars.
Fixed rates fluctuate quite often.  We can hold a rate up to 4 months.  So if you come to us 4 months prior to your renewal we can keep an eye on the rates and if they dip down a bit even just briefly we can lock that rate for you, if they increase again you will recieve the lower rate.  So instead of just accepting the rate the lender offers you, consider putting your mortgage out there to secure the best rate in a four month period from 90 different lenders.  Which is the best option for you?
If you email your renewal date with your name, address and contact info, we will be in touch 4 months prior. 

Ron Miller
Butler Mortgages

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