Mortgage renewal advice needed
Our mortgage comes up for renewal in March of 2013. At that time the balance owing will be approximately $48,000. Our plan is to remain in our current home until spring of 2014 when we plan on listing it for sale. We hope to move to a new address (with a new mortgage) by August 2014.
I plan on acquiring a mortgage in August of 2014 around $200,000 with a 15 year amortization term.
What type of mortgage fixed or variable and for what term length to take advantage of the low interest rates and reduce costs so I get in March 2013?
What is the blend and extend option (if I said that right) - is that an option for us
Looking for any advice.
Also what about locking in a rate 90 to 120 days before March 2013 is that wise?
Everybody should start looking for a mortgage about 6 months before renewal as there are lenders that will provide a 6 month rate hold on a pre-approval. Great insurance if you get caught in a rising rate environment. You could get that rate hold about now for the 2013 renewal.
Make the distinction between a transfer/switch and a refinance on your renewal should you change lenders. A transfer/switch means that the balance you're transferring doesn't increase. An increase would be classified as a refinance and treated differently by lenders (although some will allow a small increase to the balance).
There are also lenders that will cover legal and appraisal fees and your current mortgage providers discharge fees should you switch lenders. If you had mortgage insurance at the start of the mortgage then have your policy number ready as well. Some lenders will charge a small rate premium on uninsured conventional mortgages.
The other item to keep in mind is some lenders have a minimum mortgage amount they will fund (about 50K) so that will limit your selection should you want to switch lenders.
The fixed or variable discussion is really a preference given your risk aversion and some thought to your income level and what you see happening in your life going forward. Can't really be answered here without that information.
When you say blend and extend I think what you mean is a mortgage port to the new property. Your mortgage would still basically be based on the rate in 2014 since the mortgage you are porting and its associated rate would be less than 1/4 of the new mortgage balance. Also lenders can have some pretty specific rules around ports so get those in detail and in writing.
If I were you I would contact your mortgage broker and run all this by him/her so you can figure out the approach to take that best suits your needs.
Since someone with handle "themortgageguy" could be perceived to have a conflict of interest, let me chime in as someone who has nothing to do with the mortgage industry but agree with him that it makes a lot of sense for you in your situation to speak with a mortgage broker.
You are in a situation where you value flexibility. You hope to sell soon and will need to finance on the new property. You give very specific dates, but dates may shift. All reasons why you need to choose on more than just rate and % annual prepayments allowed. Good luck.
Just trying to be helpful....
Originally Posted by houska
Some lender may give you a preapproval rate but it may be higher than a 30 day special for example or 90 or 120 rate. Also it guarantees the rate but you still have to be approved through a credit check, employment check, income check etc. In some cases you make a live application on the 90 day or 120 day length and you are getting today's best rate. Once approved and the documentation is complete you just have to wait until you sign your documents at your lawyer.
Originally Posted by themortgageguy