If you are looking at buying a home or refinancing your existing home, you have probably been having a lot of discussions about interest rates (taux hypothecaires). If you enjoy talking about interest rates, fine, go ahead. It's like talking about the weather: it won't make any difference, but it gives you something to talk about.
The simple truth is that the variance in interest rates from one bank to another is so small that it will not make a big difference in the total cost of your home loan.
(As a matter of fact, the difference is only about .06%, which is a saving of $41.12 per year on a $100,000 mortgage.
With all the emphasis lately on credit scores and credit ratings, it is surprising that a lot of people still believe that shopping around for the best rate will make a big difference. Credit scores are based on a consumer's credit worthiness: whether you pay your bills on time, if you have ever defaulted on a loan (hypotheque), whether other lenders have been willing to lend to you, etc. A credit score of 500 will mean you are a bad risk, and a credit score of 700 will mean you are a good risk. Lenders set their rates for a consumer based on this score. It's that simple. So apart from a few points difference, all the lenders are going to quote the same rate for a person with a score of 650. Lets' look at that interest rate savings of $41.12 per year. If you shop around for more than 6 hours, you are paying yourself only $6.85 per hour for your time.
Much more important than just relying on interest rates as the determining factor in choosing your mortgage (prêt hypothécaire) is choosing the right mortgage strategy. There are many mortgage strategies that can be used to manage your mortgage costs over time. Choosing the right strategy is much more critical in determining costs over time than just using the interest rate as a gage.
How can you find out the best strategy? Working with a mortgage consultant (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.
Not convinced? You can get more details and understand how this phenomenon can be true by reading the following article.
Gregory writes articles for
Informezvous.com - hypotheque and he is the owner of
www.infohypothecaire.com - Pret hypothecaire.
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