Mortgage Rates - Something Better Than Shopping For Rates
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Mortgage Rates: Beyond Just Finding the Best Rates
Introduction
Is there truly something better than securing the lowest mortgage rates? Surprisingly, yes. While it contradicts popular belief, there’s more to consider, and I can prove it.
Understanding the Best Rates
Let's first clarify what "best rates" means. The best rate is the most favorable mortgage rate a lender can offer you. With the rise of super mortgage brokers and the Internet, the mortgage industry has become fiercely competitive. Typically, lenders offer rates within 0.06% of major banks. Using a mortgage broker simplifies this process.
However, the financial gain from a 0.06% better rate on a $100,000 mortgage is merely $1,028 over 25 years, or about $41.12 annually. That’s not exactly substantial savings.
A Superior Strategy
Dr. Milevsky from York University (Toronto, Canada) conducted a remarkable study comparing two mortgage strategies from 1950 to 2000. His findings revealed that:
- One strategy was better 88% of the time, saving an average of $22,000 on a $100,000 mortgage over 15 years.
This translates to annual savings of approximately $1,466.66, highlighting that selecting the right mortgage strategy can be far more impactful than shopping for slightly better rates.
The study shows that while no single mortgage strategy is always superior, choosing the right one is crucial. This conclusion applies to both Canadians and Americans, as interest rates and strategies are similar in both countries.
What You Should Do
Choosing the best mortgage strategy requires more than simply seeking the lowest rate. You should:
1. Analyze your financial situation and long-term goals.
2. Consider current interest rates and their potential trends over the next 10-15 years.
3. Choose strategies based on this analysis.
Seek a mortgage broker who goes beyond rate shopping. Find someone who will help create a comprehensive plan to save money over the mortgage's lifespan. Request them to present several strategies along with their recommendations.
By doing so, you could save a significant amount of money over time.
You can find the original non-AI version of this article here: Mortgage Rates - Something Better Than Shopping For Rates.
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