How to beat the lowest home loan rates(taux hypothécaire)

How to save money on your mortgage (hypothèque)

If you are asking yourself how to get the best interest rate on your mortgage, you are asking the wrong question. (For more about that, read How to beat the best rate!). What you should be asking is how do I choose the right mortgage strategy for my particular needs.

What’s the correct mortgage strategy? Well, you probably can’t answer that question for yourself. What you can do is consult a mortgage specialist who specializes in custom mortgage packages. Why do you need to do this? The main reasons are -we don’t know where interest rates are going. -economic conditions, both present and future have to be considered. -A mortgage strategy is a complex, uniquely personalized approach that takes each borrower’s situation into account.

You see, a professional mortgage consultant has the ability to conduct an in-depth analysis of various options that may or may not suit you. To do this, he has been trained to understand all of the mortgage products available and to choose which one is right in a given situation. In addition, he knows where we are in an interest rate cycle and he can evaluate of the probable movement of interest rates over the next ten to fifteen years.

To completely understand interest rates would take a lifetime of academic study, but there are basically three interest rate situations and two rules that interest rates follow. Situations: Interest rates trend higher. (This was the situation from 1950 to 1980.) Interest rates trend lower. (This was the situation from 1982 to 2003.) Interest rates stay in a narrow range. (This was the situation from 2003 to 2006.) If you don’t understand these trends and use the wrong strategy, you could end up paying as much as 20 times more in mortgage costs over the life of the mortgage.

In addition to the way interest rates fluctuate, interest rates follow certain immutable laws. 1. Interest rates follow the inflation rate. That is, increases in the consumer price index will lead to increases in interest rates. 2. Interest rates change according to the state of the economy. In a weak economy, interest rates will be lower and in a strong economy, interest rates will be higher.

Predicting interest rates is nearly impossible. Over the last thirty years interest rates have increased, averaging 9.25%, but recently have been decreasing and are now approaching 5%. At this level, you may have considered a fixed rate mortgage for five years. But that strategy has been the most costly over the past decades.

There are quite a few mortgage strategies that mortgage brokers have to choose from. An expert mortgage professional can pick and choose from this mixed bag of strategies and design the perfect one for you.

He may decide among the following strategies: A five year fixed term loan that is renewed every five years. A fixed rate loan for 10, 20 or 25 years A variable rate loan based on the Bank of Canada base rate. Using the Smith Maneuver where the borrower can deduct interest from income tax. Using the equity in a residence to supplement retirement income. Calculate the cost differences between renting while saving for a down payment, or opting for a no down payment loan. Using a loan to improve a credit score for an eventually cheaper loan.

Good mortgage planning and finding the right mortgage strategy in each case is what a mortgage broker will do in order to save mortgage expenses, sometime as much as 20 times or more, over the life of the loan.

That’s what a mortgage broker will do when he meets with a client. Each person’s individual needs and goals are discussed, and then any mortgage strategies that may be open to him are applied to his situation, under the present and anticipated economic conditions. Not taking these steps with a professional mortgage consultant can result in paying too much. A consultation is free, not having a consultation is very expensive.

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com