You might get a better deal if you renew your home mortgage even before its term expires. Usually you renew a mortgage at the end of its term. But you might be able to renew it at your convenience. If you assumed a loan when you bought it, it might be set to expire, anyway. Or perhaps you opted for a short-term mortgage and now would like to switch terms for a lower payment with a longer term. Ask your lender for a renewal at any time and most will grant it.
Don't wait until you get a renewal notice to start thinking about changing your mortgage. Shop around, talk to other lenders and get information on rates and terms from different financial institutions. Start your research maybe six months before your mortgage is due to expire, or before you want to make a change, so you have plenty of time to gather information.
Ask Your Lender
Ask your current lender about renewal options. Tell your loan manager or representative you're starting to look at other mortgages. Lenders don't often approach homeowners with better deals. But sometimes if you ask, the mortgage holder will come up with other deals, like lower interest rates. Deal with your lender face to face. This tends to get better results than communicating online or on the phone.
Think About Types
Think about what kind of mortgage rate will be best. You can get a fixed rate, with the same interest for the life of the new mortgage; or a variable or adjustable rate mortgage. You can get variable rate mortgages where your payment stays the same but the percentages of interest and principal vary. With an adjustable rate, the interest rate and payment can vary with interest market fluctuations.
Use Your Options
Look for a mortgage that offers the option to pre-pay or convert to a longer term at any time without a penalty. Don't always accept an institution's posted rate, especially if you are a long-time customer, have other assets in the bank, or have some special relationship like a business loan. You might qualify for a better rate.
Check Before You Switch
Don't hesitate to change institutions on a renewal if you get a better deal, but be sure to look at the fine print. You might get a couple of points lower interest. But you might also have to pay appraisal fees, legal expenses or other costs to switch.
Bob Haring has been a news writer and editor for more than 50 years, mostly with the Associated Press and then as executive editor of the Tulsa, Okla. "World." Since retiring he has written freelance stories and a weekly computer security column. Haring holds a Bachelor of Journalism from the University of Missouri.