Everyone likes to save money. We’re always looking for ways to get great deals, use coupons, buy things on sale and so on. When it comes to a mortgage, it is pretty much the same thing.
People want to save or make things easier on them. However, unlike a lot of other things we try to save on, looking for the lowest mortgage rate might not actually be the best thing to do. Many people commit this mistake.
You may get away with many other things when you go for a lower price, but mortgages don’t work this way. Let’s look at why this is the case.
1. Complication Without A Broker
Many people who did not use a broker may do things differently if they had a second bite at the cherry. A mortgage can be a pretty complicated thing. Most people just do not have the experience to know what is right for them. Having a broker can really make a difference and a huge one at that. Those who choose not to go with a broker think that by going with the mortgage with the lowest rate, they are home and dry. This is a big mistake.
There are so many considerations and questions to ask. If you do not know what you are doing, you will end up with a mortgage that is not right for your situation. The irony here is that a lower mortgage that isn’t right for you may save you hundreds of dollars but it could also cost you thousands more.
Many people do not ask about mortgage penalties. A lot of the time, this is probably a more important thing to consider than the actual rate itself. Remember that life is not always straightforward. Anything can happen. Unless your name is Nostradamus, you cannot predict the future. What if you lose your job? What if you got seriously ill?
A smarter way of looking for a mortgage is to get one with flexibility and one that would incur a lower penalty for all those times life gets in the way. If something happens and you were penalized, you could end up losing thousands of dollars! Let’s say you had a job opportunity in a different province. You may not take the job, one that could have been your dream job, simply because you would lose a huge amount if you took it.
3. Extra Payments
Everybody would love to pay off their mortgage sooner rather than later. If you got a mortgage that allowed this in addition to your regular payments, wouldn’t that be great? You also won’t be penalized for doing so. You can shorten your mortgage amortization period with prepayments. This can potentially save you thousands of dollars.
4. Portable Mortgage
You know yourself best. If you feel that you may be posted to a different location or if you think you’ll move to a new city within 5 years, a portable mortgage would be ideal. Then, you can sell here, buy elsewhere and not be penalized for it.
Consider many things before jumping on the lower rate. It may be worth it to use a broker and do in-depth research on mortgage rates. Lower does not always mean better when it comes to mortgages.