How to Renew your Mortgage (a.k.a. Why You Should Never EVER Auto Renew your Mortgage)
That’s right, we’re telling you not to sign your bank’s renewal letter, even though it’s so easy to do!
We know they send a lovely white envelop conveniently to your mailbox a few weeks before your mortgage is up for renewal. All you have to do is sign it and send it back, and it doesn’t even take more than 5 minutes and you don’t have to think about mortgages again (sigh!)…well, until your next renewal date.
Here are 5 reasons why you should force yourself to set fire to your mortgage renewal letter, or at the very least recycle it.
#1: You Can Save Money
…and a lot of it (and who the heck doesn’t want to save money?). Let’s get straight to the point: you can just skip reading reasons 2 to 5 because this here is the heart of the story.
Your lender will NOT offer you the lowest possible mortgage rate in your renewal letter.
You have a very good chance of getting a better rate if you shop around. Pure and simple. Signing the renewal letter is like putting your hard earned cash into the pocket of your bank, instead of yours.
#2: Every Little Bit Counts
Even if you can shave 0.20% off of your mortgage by shopping around, you’ll end up saving yourself a significant amount of money, for example you would save $8,000 in interest if you had a $250,000 mortgage amortized over 25 years. So go on and take that dream vacation you’ve always been wanting to take with the extra money you‘ll save.
#3: Time Changes Everything
You’re not the same person you were when you signed your last mortgage contract. Maybe you’ve switched jobs or got a fancy promotion. Perhaps the family has grown and you’ll need to consider a larger home soon. When you sign that renewal letter you’re signing up for the same product that suited you years ago, instead of looking at how your personal situation has changed and if there’s a better option out there for you now.
#4: Because You’re Worth It
Renewal time is the perfect opportunity for you to take stock of the relationship you have with your current lender. How responsive have they been in the past when you had mortgage questions? Do they keep you up-to-date about your current mortgage balance? Do they get in touch with ideas about how you can pay off your mortgage faster? If the relationship with your lender is nonexistent or weak, renewal time is the perfect time to make a switch.
#5: You’ll Feel Better
Really? Yeah, really. By taking the proper time to review your mortgage, you are taking control of your personal finances. If you’re able to save yourself some money by shopping around, you’ll feel better for it. The extra time and effort put forth will be worth the savings.