Stay Ahead of the Game: Why Regular Mortgage Check-Ins Matter

Introduction:

In our lives, we have regular check-ins with various professionals such as doctors, dentists, financial planners, and accountants to ensure our well-being. Surprisingly, one area where we often neglect regular check-ins is with our mortgage. However, establishing a routine check-in can bring significant benefits to consumers, brokers, and lenders alike. A mortgage is not only the largest investment and debt most people will ever take on, but it also carries a substantial responsibility for all those involved in the process. In this post, we will explore the advantages of regular mortgage check-ins and how they can help borrowers navigate the ever-changing market.

Understanding the Current Market:

To highlight the importance of regular mortgage check-ins, let's consider the current market conditions. Interest rates have surged by over 400% in less than a year. Clients with variable mortgages may have rates ranging from 5.70% (prime minus 1%) to 6.20% (prime minus 50bps). For those utilizing a Home Equity Line of Credit (HELOC) to cover increased costs in an inflationary market, the interest rate could be as high as 7.70% (prime plus 1%). Clients with unsecured credit or credit card debt may face rates of 8.70% to 20% or more.

Benefits of Regular Mortgage Check-Ins:

1. Seizing Lower Fixed Rates: Through regular check-ins, borrowers could have the opportunity to lock in lower fixed rates compared to the current market rates, which are hovering around 5%. This allows them to protect themselves from potential rate increases and plan their finances more effectively.
2. Understanding Mortgage Payment Dynamics: A mortgage check-in enables borrowers to learn whether their mortgage payment is subject to change with the prime lending rate. This knowledge is crucial, especially in an increasing rate environment, as it helps borrowers assess their options, such as staying with a variable mortgage or converting to a fixed rate.
3. Consolidating High-Interest Debt: Regular mortgage check-ins can help borrowers with HELOCs and other unsecured debts consolidate their obligations into a mortgage, potentially reducing their overall cost of capital. By leveraging home equity, borrowers can improve their cash flow and alleviate financial stress caused by skyrocketing interest rates.
4. Planning for Renewals: By staying proactive with mortgage check-ins, borrowers can get ahead of their mortgage renewal process. They can explore competitive offers from other lenders, assess the feasibility of early renewal, consider consolidating HELOC components, and determine the proportion of their payment going towards principal and interest.
5. Financial Preparedness: Annual mortgage check-ins provide an opportunity to plan for various life events that may impact one's mortgage requirements. Whether it's retiring, changing careers, becoming self-employed, or purchasing additional properties, these check-ins can help borrowers align their financial goals with their real estate portfolio.

Taking Action: Implementing Regular Mortgage Check-Ins

To promote the well-being of our clients, we have implemented a one-page business plan that will be provided to all individuals who connect with us, regardless of whether they require mortgage financing or not. This complimentary service includes a personalized illustration and health check of their real estate needs, setting them up for future success. For clients who choose to proceed with a mortgage through our services, the one-page business plan will serve as a tool for regular updates and needs analysis. While our passive customer relationship management (CRM) efforts and maturity check-ins will continue, we are committed to increasing proactive connections and regular health check-ins to ensure our clients' financial health.

Conclusion:

Regular mortgage check-ins are no longer a question of whether they are necessary but rather how often they should occur to ensure borrowers' needs are met. Just like we prioritize regular check-ups with healthcare professionals and other service providers, it is crucial to give our mortgages the attention they deserve. By staying proactive and engaging in regular conversations with mortgage brokers, borrowers can protect their financial interests, seize opportunities for savings, and plan for a secure future. So, let's make regular mortgage check-ins a priority and ensure our financial well-being remains on track.

Scott Westlake scottwestlake.com