The continuing inflationary pressure on the economy, along with the recent banking controversy that began at the Silicon Valley Bank, may give more than a few homeowners a reason to evaluate their mortgage situation.
Now that the Fed has pushed rates to the highest point since 2007, and inflation is sitting at around 6.5%, these top tips may help you evaluate your current position.
Approach your lender
Don’t wait until you’re at your wit’s end to do this. Lenders appreciate proactive clients. They will give you several options to help ease any fiscal pain or tell you where you stand.
Talk to a broker
Brokers offer their services for free, and they will give you a wide range of options with alternative lenders eager to win your business.
Fix your rate
This is a popular strategy, but lenders are making these deals increasingly expensive to hedge against further rises from the Fed. Also, be aware certain conditions may lock you into the lender when you fix your rate. Seek advice before proceeding.
Pay fortnightly
Ask if you can pay your mortgage every fortnight instead of monthly. Do this, and you’ll pay the equivalent of an extra month’s mortgage over a year. The savings on interest mounts up over time.
Reschedule the loan
If you’ve been paying your mortgage for several years and tough times start to bite, ask your lender about rescheduling the loan. The outstanding debt is re-calculated over 25 or 30 years to reduce your monthly payments. You can always increase the payments at a later date. Be aware you’ll pay more interest over the life of the loan. So, again, seek professional advice before proceeding.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.