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Why the best mortgage rate is not always the lowest

Why the best mortgage rate is not always the lowest

Piggy bank tipped over with bottom missing and coins spilled out

I love my job as a mortgage broker, and my clients love that I help them navigate the complicated world of mortgages! They rely on me to help get the best rates and are sometimes surprised to learn that it doesn’t always mean the lowest rates. Let me explain…

Just like shopping for a vehicle; it’s not the cheapest car you always go for, it’s the one that’s best suited to you and your situation. For instance, if you need to haul bulky items around for work or sports, you wouldn’t buy a Mini, or, if you dislike winter as much as some people, you know you need those heated seats! The same goes with a mortgage…scoring the cheapest deal out there without taking your personal needs into consideration can be costly in the end.

How is it possible that a lower rate can cost you more?

The lowest interest rates are low because they come with restrictions, and limit your flexibility. The lenders may offer you a low, fixed rate, but they know they can possibly recoup more money down the road with penalties or fines for adjustments or sudden changes to your mortgage. It’s not an uncommon occurrence with other businesses you might be a customer of, for example, some of us pay less for insurance but have a bigger deductible IF something goes wrong. The same goes with interest rates; the more features or flexible options you want can cost a bit more than a fixed, low-interest one. However, in paying a little extra in rate, you can breathe much easier if, or when, life throws the unexpected at you and you’re suddenly in need of making a change to your mortgage! Without that flexibility, you could end up paying the piper for your last minute shift.

Some key considerations when looking at mortgage rate options are…

When negotiating your interest rate, just like all other aspects of your mortgage, you need to know your options. Here are few examples of key questions to consider when locking in your next mortgage:

1)    What if I need to refinance due to an unexpected job loss, break-up, unexpected home repairs, etc.?

2)    Can I put extra money down to pay off the mortgage? If so, how much and when?

3)    Are my closing dates flexible? What happens if they aren’t?

4)    What if I move and sell my house before the mortgage is up?

So, what is the best mortgage rate for you?

Life is unpredictable; we may not foresee a move, break-up, illness, or other life changes when we first secure our mortgage. A no-frills, low-interest mortgage that can end up penalizing you for adjusting or breaking your mortgage can be devastating! You don’t want to look back and realize that although you saved a fraction of a percent on interest, you ended up paying thousands extra in unexpected charges.

As a qualified mortgage broker, it’s my job to sit down with you and ask questions to get a good handle on your present situation, while also discussing your future needs. I crunch the numbers and show you the different options and scenarios so that you can make the best decision. You may end up choosing a flexible rate with slightly higher interest, and be content knowing you won’t be caught off-guard with penalties down the road!

Mortgages, especially to a first-time home buyer, can be overwhelming and confusing at times. As I’ve said before, I love my job, and there’s nothing more rewarding than seeing my clients get to move into the home of their dreams, so don’t hesitate to give me a call when you have questions! As an experienced mortgage broker, I live and breathe mortgages, and I am here for you. Just give me a call at 705-315-0516 and we’ll get you the right mortgage, the right home, and the peace of mind you deserve.

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