As your mortgage coach, my number one goal is to help you understand your options so you can get the best mortgage possible for your needs.
Most people assume the only way to get the best mortgage deal is to get the lowest rates. When I ask people why they want the lowest rates, they look at me like Im crazy. The lowest rates dont always mean the best mortgage deals, though. There are a number of factors that also contribute to the amount you pay toward your mortgage. These other factors include:
- Poor Strategy
- Inflexible Terms
- Unfair Penalties
- Reduced Negotiation Strength at Renewal
Of course, as your mortgage coach, I will work very hard to get you the lowest possible rates. Theres no denying that mortgage rates can drive up the cost of borrowing. However, we must consider the amortization period, the payment schedule and other matters with equal weight. I urge clients to look past the simple issue of mortgage rates and think of overall strategy. By selecting the mortgage with the most beneficial terms, looking carefully at the penalties and working with institutions that are known for being buyer-friendly, we can get a better deal.
From my experience, this strategy gets results EVERY TIME.
Just consider the following example based on a $100,000 mortgage with 25-year amortization:
|Example 1||Example 2|
|Interest: variable open at 3.99%||Interest: variable open at 4.11%|
|Monthly payment: $538.35||Monthly payment: $544.82|
The second mortgage looks like it would cost more with a 4.11% variable open interest rate. If the mortgage rate difference was as much as 2%, the difference over five years could be approximately $6,755, which really makes a difference. However, this math doesnt take the fine-print economics of the mortgage contract into account. Factors such as how often and by how much you can increase payments, lump sum payment availability and payout penalty can drastically affect how much you pay. You could end up paying much more with the first mortgage even though you chose the option with the lowest rates.
These are just a few of the reasons why rates are not the most important factor to consider when shopping for a mortgage. If all this sounds confusing, know that youre not alone. I have helped countless clients navigate this complicated process in order to get the best mortgage deal possible, and I can do the same for you.