Why your Interest Rate should be #3 on your Priority List
The advice I am about to give will seem very backwards coming from a mortgage broker. As much as it pains me to admit I am not the “be all end all” when it comes to the real estate purchase transaction, it is the truth. Breaks my heart to write that haha! More than ever before because of the recent 24 months of mortgage rule changes and interest rate increases, I have been giving the following advice on how to save money . It’s a hot topic!
Don’t get me wrong, you want and need a mortgage brokers advice when buying a home. To discuss goals, product, rates, penalties, etc. A mortgage broker will have immense value and can save you thousands of dollars because of the planning and strategies you put together. Of course interest rates are a major factor in savings money, but should be further down the list than you think.
Interest rate should be #3 in fact… at the most! Here is why and what comes before:
- House is #1. Every time! I have seen clients work with a realtor and find a perfect home that has been priced to sell, or a foreclosure, and the home is way undervalued. Sometimes as much as $30,000-50,000! There is no way you will be able to save that in your mortgage over a 1-5 year mortgage term! I may be able to work magic and save you $5,000-10,000 compared to your bank’s rate quotes, but that still doesn’t compare to the savings that a realtor was able to get you!
- Mortgage product is #2. I have got some amazing interest rates over the years for clients and smoked all the competition. The client is thrilled, spreads the word and is on cloud nine. Then all of a sudden, life throws a curve ball and they decide to the sell that home and pay out that amazing interest rate early. Now that 5 year term that was expected to be the ideal timeline was to long and the penalty to leave is now $8000! All of those savings with the low rate is thrown out the window in one swift move. For example, if you know that you will be doing some renovations and updates to the home and would consider selling in 3 years if they right offer came along; then a 5 year fixed would be a terrible choice no matter what the rate! Planning for your specific real estate goals, expectations with that particular home, and finding the most ideal product will beat out that unbelievable rate 9 times out of 10.
- Interest rate wins the bronze medal at 3rd. Once you have the right home at the right price, and the mortgage product that matches your goals then the rate is very important. You might as well save as much as possible once you have those 2 other priorities in place, right? Exactly! That is when I, your mortgage broker, go to work finding the absolute best rate with the real estate and product goals in mind. When we find the “sweet spot” (the point where the ideal product intersects with the best rate for that product) we get that approved for you. If that can happen, then you have checked off the top 3 priorities when it comes to saving money!
There are plenty of other goals to have along the way, such as location, type of home, mortgage products for future investments, close to family, and the list goes on. But if you are looking at how to prioritize saving money, these are your 3!!
All the best on your house hunting and hope we get the chance to save you some serious money! You can apply right here if you want to us a shot at saving you money on your next mortgage: https://mortgagecrusher.ca/apply-for-a-mortgage/
Email me or comment if you have any questions or need any clarifications! Would love to dive deeper into this and make sure you are maximizing your hard earned dollars.