Who would have believed that mortgage rates would have such a continued downward trend? Mortgage shoppers are looking at some of the lowest rates in history, and many homeowners with existing fixed-term mortgages are experiencing some “rate envy” about today’s rock bottom rates. It might be worth a conversation about your options. Typically, we think of a fixed term mortgage as a non-negotiable contract. And it’s true that there are financial penalties to re-negotiate. But, many clients have
Home buyers generally ask us what is the penalty to break a mortgage? Most homeowners should expect to pay a penalty if they want to break their mortgage to get a better rate or for a complete refinance. Homeowners in 5 year fixed mortgages often look to break their mortgage during their 3rd year for debt consolidation or to accommodate changing life circumstances. The penalty to break a mortgage is typically the greater of three months’ interest, or the interest-rate differential
The prepayment privileges that come with your mortgage are there for a reason – they help you pay off your mortgage faster and reduce your interest costs. Prepayment privileges differ from lender to lender (up to 15%, 20% + 20%, double up, lump sum). Take the 20 + 20 privilege; it allows an annual mortgage payment increase of up to 20% of the current payment. The second 20 allows a yearly lump sum payment of up to 20% of the original principal. Example: $200,000 mortgage amortized for 25 years
