Mortgage Renewal Rates

I have been dealing with quite a few mortgage renewals as of late.  It has been my experience lately that most people will call their current mortgage lender and will only find out what the 5 year fixed rate is today as it seems to be the best deal going right now. 

I would suggest that you find out from your lender what all of their term options are.  They might have 1 through 5 year rates as well as 7 year, 10 year and variable rates.  One client called me with an offering for a 5 year fixed @ 2.94% which is very good.  That being said, the lender has been one I have dealt with very recently on a couple of renewals so I had knowledge that they were offering their customers 2.39% on a 4 year fixed. 

To give up just a year on your term you are reducing your rate by more then 1/2 a percent with a reduction of 0.55%.  Just to show you an example supposing you had a mortgage with a balance of $300,000 and 25 years remaining, your payments would be $1,410.52 @ 2.94%, now if you had the same balance along with 25 years remaining your payments would be $1,327.52 @ 2.39%.  That is a difference of $83 every month. 

It was my opinion that the clients should call their lender and ask them to send a 4 year offering in hopes that they too would also get the low 4 year fixed rate of 2.39%.   Personally I don't think that I would be willing to take the risk of a 1-3 year term right now so the 4 year to me would make the most sense. 

I would recommend to anybody going through a mortgage renewal to contact a mortgage broker to get their advice.  It doesn't cost you anything and you may wind up with a much better deal without having to do too much.  A simple conversation can save you money.