Most homebuyers are keenly aware of their mortgage rate—at least at the outset.
But it seems that awareness wanes once they get settled in.
In fact, according to a recent study by Bankrate, a whopping 29% of homeowners don’t know their current mortgage rate.
It’s a mistake that experts say could have serious repercussions. From thousands more paid in interest to missed payments and lost financial opportunities, the costs of not knowing your rate can be big.
Don’t know your mortgage rate? According to industry experts, here’s what could happen.
You might be paying off the wrong debts.
“It is important for homeowners to know their mortgage rate so they can compare it to the interest rates on their other debt like student loans, car loans or credit card debt. This can help them prioritize which to pay off first.
People are often tempted to use any extra dollars they have to pay down their home mortgage before other debt sources because it is the largest. But considering home mortgage rates are usually lower than interest rates on other forms of debt, this could be a mistake, as they are likely accruing interest at higher rates on their other debts and should prioritize paying those off first.” -Paul Ruedi, Ruedi Wealth Management
Your loan may take longer to pay off.
“Understanding your mortgage is key to having a plan in place to reach your goal for that property. When you know your interest rate and monthly payment, you’re in a better position to pay off the loan sooner should you choose to make additional principal payments.” -Stephen Rischall, 1080 Financial Group
You might miss a chance to refinance.
“It’s important to know your mortgage rate so that you can compare it to current mortgage rates to evaluate whether you may want to consider refinancing your mortgage. This is especially important with adjustable-rate mortgages because if your interest rate is increasing as interest rates continue to rise, you may need to make a decision to refinance to a fixed rate. The higher interest rates go, the higher your variable rate mortgage is going to go and the more money it will cost you.” -Ed Snyder, Oaktree Financial Advisors
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