So often this is the first question that clients ask. How can you blame them? The media and other outside influences have trained us to think that way. Every website and window ad we come across is advertising some sort of rate. What the majority of consumers fail to realize is that the two rates they are comparing, may be two different products. One may come with all the bells and whistles, ie. prepayment privileges and payout options, basically the Cadillac of mortgages; while the other may not have any prepayment privileges and may be totally closed, basically the Toyota of mortgages. Both will get you from A to B, but one will definitely get you to your destination a lot quicker. Of course, this destination we speak of is your Mortgage Freedom Day.
Therefore, instead of asking, “what is your best rate?” A more appropriate question should be, “what is the best term for my family and our situation?” As we have seen time and time again, choosing the wrong term may end up costing you a lot more in the long run.
For example, as a Mortgage Expert, it is my job to get to know you and understand what your plans and goals are. If your plan is to be in this home short term, maybe 2 or 3 years, then it might not be the best idea to be discussing 5-year options as you will likely pay a penalty to get out of that mortgage in 3 or 4 years time. However, this house could be the one you plan to stay in for a long time and grow your family in. Or maybe it is a revenue property that you want to know what your expenses will be long-term. Well then maybe we should be taking a look at the security of a 10-year term which is currently priced historically low and never before has it been priced so close to the 5-year rate, with just a .60% spread from the average 5-year rate available. Two great products. Two totally different purposes and situations.
The bottom line is, we put a strategy in place for all of our clients and because of these strategies, our clients tend to pay off their mortgages, and realize their Mortgage Freedom Day, much sooner than the average person. After all, isn’t that the ultimate goal?