Mortgage Loans - The right mortgage strategy can make you save 20 times more than the best rate. (taux hypothécaire)

Mortgage interest rates (taux hypothecaire) seem to be the name of the game in the lending market. All of the mortgage company ads seem to scream "Lowest rates in town!" lenders fly gigantic banners outside their branches advertising that they have the lowest rates of anyone. Yet, despite this emphasis on interest rates made by the banks and other lenders (and by consumers, who are unduly influenced by these ads), in reality, interest rates do not have that great an effect on the overall cost of a mortgage loan. The truth is that rates don't vary all that much; the difference only ranges about .06%. That means on a $100,000 mortgage your savings would be $41.12 a year by shopping around.

We all know by now that interest rates charged on mortgages (prêt hypothecaire) and all other types of loans are determined by credit ratings. Why, then, with all the discussion about credit ratings and credit scores, are we still so naïve as to believe that one banker will look at our credit rating and say 7%, and another will look at that same exact credit rating and say 6%? Credit ratings are based on the risk the bank faces when it lends money to you (and, more importantly, the risk it faces about whether it will get paid back). There is a higher premium over their cost of funds if they risk that you will pay slowly or not at all, and a lower premium if you are a good risk. Consequently, the range of rates, based on the same type of credit rating, is very small. It hardly seems worth the trouble to save such a small amount, does it? Especially if you, like most people, look all over the internet for hours to find out all of the rates that are being offered out there.

There is a more important issue to look at. Instead of solely relying on obtaining the lowest interest rate, a mortgage borrower should be concentrating on following the correct "mortgage strategy". There are various mortgage strategies that are out there, from fixed to floating rate loans (taux hypothecaires), balloon loans or prime rate based loans. Working with a mortgage lender who is knowledgeable about the markets, looking at yield curves and who studies your individual circumstances to devise the perfect mortgage strategy for you is going to save you a lot of money over the life of your mortgage loan. It can probably save you tens of thousands of dollars in total mortgage costs, rather than less than $100 per year.

How can you find out the best strategy? Working with a mortgage broker (courtier hypothécaire) who understands the economic markets, who works closely with you, who understands your needs and particular circumstances, and who combines this knowledge and information with the best rates available is the secret to finding the right mortgage strategy. Understanding this concept can save you tens of thousands of dollars in home loan costs, rather than tens of dollars.

If you want to know more about this kind of an idea, continue on to the main article.

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Gregory is an Accredited Mortgage (Hypotheque) Professional (AMP). To get more information on mortgages - prêt hypothecaires, please visit: www.infohypothecaire.com/hypotheque

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