Step 9: Your mortgage check-up

Once you have bought your house and settled in, it is important give yourself a mortgage check-up every few years. Keeping your eye on interest rates can help save you money on your mortgage.

Reassess your mortgage if your financial situation has changed.
Since you bought your house, has your salary increased significantly? Have you had another child? Started your own business? If any of these are true, it’s a good idea to reassess your mortgage. Perhaps you can find a mortgage product the better suits your financial situation. Or you may be able to accelerate your payments to boost your home equity faster. Regardless, as your career and family grow, your finances change and you might able to lower your monthly payment or pay off your home faster.

Have interest rates dropped?
If you have a fixed-rate mortgage and interest rates have fallen, you might want to consider refinancing. Refinancing is when you replace your current mortgage with a loan that offers better rates and terms. This can end up saving you a significant amount of money on your monthly mortgage payments. If you do decide to refinance your mortgage, be sure that the fees and costs associated with refinancing are worth the new rates and terms. Research the loan market and stay updated on trends so that you know when the right time is.

Have interest rates increased?
If you have an adjustable rate mortgage (ARM) or hybrid ARM, rising interest rates can increase your payments. Make sure you “stress test” your ARM: Can you afford to pay up to your lifetime rate cap? If not and rates continue to rise, refinancing to a fixed-rate loan may help limit your exposure to rising rates. Again, make sure the costs of refinancing don’t outweigh any benefit.

As you gain more equity in your home, it becomes a more and more valuable financial resource. Be sure your mortgage works for you and you are getting the best deal.

Return to Guide to Mortgages.

Back: Step 8: Close on your home.

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