Wednesday, December 1, 2010
Mortgages, mortgage rates, and interest rates have been on our minds lately. In order to be comfortable in purchasing a home, these topics become extremely important. The following article may explain some information that may help in the decision process of mortgage choices and payment plans to pay it off faster. I have now gone beyond being 'approved' for a mortgage and am asking my buyers to get a 'Letter of Commitment' from your lender.
Posted by Jason Reis of Monster Mortgage
"Most people who go shopping for their own mortgage get sucked into the bank's "low rate game". They think, "as long as I can get the lowest interest rate from my bank, I will be able to pay off my mortgage sooner rather than later." As we have seen time and time again, people who play this game ALWAYS LOSE! Rarely do they walk away with the best mortgage rate, terms and conditions that will allow them to be mortgage free faster so they can contribute to their bottom line and not their bank's.
At MonsterMortgage.ca, I have worked with many individuals and their families to help them understand how a mortgage is much more than just a low fixed or variable mortgage rate. In most cases, the cheapest and lowest rate almost always comes short of the necessary features and flexibility you need to make sure your mortgage plan helps you pay down your mortgage faster. This is when the old adage “you get what you pay for” applies to your mortgage as well.
If you want to be mortgage-free faster, it is extremely important to understand what the pre-payment privileges attached to your mortgage are and the restrictions and flexibility that surround them. The pre-payment option in a mortgage is the only way you can pay down the principal of your closed mortgage without being charged a penalty. Terms such as “locked-in”, “closed” and “pre-payment penalty” are found throughout the mortgage documentation and we understand how this terminology makes it difficult for anyone to believe there is any flexibility when attaining a mortgage that is right for you. This is no accident as your bank DOES NOT want you to pay off your mortgage faster. Remember, the longer you take to pay down your mortgage, the more money your bank makes!
The fact and reality is that all mortgages will offer some sort of option to pay down your principal, but it is understanding the parameters offered that will make all the difference. The pre-payment option will encompass two methods of paying down your mortgage principal; 1. the ability of increasing your regular payment up to a specified maximum of your original payment amount and 2. applying a lump sum payment amount onto the mortgage up to a specified maximum of your original mortgage balance each year. Both options will vary depending on the lender as to what the parameters of frequency are and what the maximum percentage is set at. The percentages can range from as low as 5% to as high as 25% for each method and can really dictate the remaining life of the mortgage.
This is where an unbiased mortgage agent can be of most value as we can scan and understand all lenders products, not just one bank’s, so we can find you the most suitable mortgage product with the terms and conditions that works best for you, not the bank."
Thank you, Jason.
For further information or to connect with a Monster Mortgage Specialist, feel free to contact me directly at 416 427 1875. Let's get the process started to help you towards the purchase of a home.
Betty Bartusevicius, Sales Representative
Re/Max Realty Specialists Inc., Brokerage
Fine Homes In Nine Oh Five
Web Site: http://www.bettybart.com
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PSST: IF YOU KNOW SOMEONE WHO IS THINKING OF BUYING OR SELLING A HOME AND NEEDS MY HELP...FEEL FREE TO PASS ALONG MY NAME AND NUMBER TO THEM! ALL INTRODUCTIONS ARE GREATLY APPRECIATED
this is not intended to solicit buyers or sellers under brokerage contract