As the longest spring in memory finally gives way to summer, it's nice to see people safely enjoy the sunny weather. I hope that you and yours are in good health. There continues to be uncertainty about the shifting mortgage market. Here are the most common questions:
Should I break my fixed mortgage to get a lower rate?
If you're only partway through your term, you'll need to pay a penalty to break your mortgage. Locking in a low rate now can be a strategy to provide some reassurance in an uncertain future, and you may be able to save considerable money over the long term and not be out of pocket to complete the transaction. If this is a question that's on your mind, I can provide you with a detailed cost/benefit analysis.
Can I refinance my mortgage to deal with high credit card balances?
If you have more than 20% equity in your home, you may have the option of refinancing your mortgage and roll all your debts into a new, low-interest mortgage. You can get immediate cash-flow relief and one manageable monthly payment. Your lender will need to re-qualify you, so if you're dealing with reduced income, that could impact your ability to qualify.
What about my mortgage renewal?
A lost job or drop in income will be a factor if you want to move to a new lender for a lower rate. You can renew with your current lender at their best offer, or use an open mortgage for a few months, with a strategy of moving to a lower-rate closed mortgage without penalty as soon as your finances stabilize. Regardless of your situation, let's talk soon so we can avoid any last-minute decisions.
Should I lock in my variable-rate mortgage?
If you have a deeply discounted variable-rate mortgage, you are in a very good position given the recent drops in prime rate. Variable mortgages can be converted to fixed without penalty, providing long-term peace of mind knowing you have security for the next five years. While the rate environment remains in flux, it might be best to enjoy your lower rate for now and re-evaluate in 6 to 12 months.
Should I take the mortgage payment deferral that is available?The immediate relief is compelling. However, your lender will add the interest accrued during the skipped period to your outstanding balance, increasing your mortgage amount. Alternatively, you may be able to borrow from a Line of Credit, making interest-only payments until the financial stress begins to ease. Other options include extending your amortization or moving from accelerated to monthly payments.
Fixed or variable mortgage rate?
The answer again depends on you: your tolerance for risk, where rates are expected to go, and personal preference. With the rate environment changing all the time, what may be the right decision for you this week, could be different next month. Let's have a conversation so I can get a clear picture of your plans and the current situation.