Busted! Don’t Believe These Mortgage Myths!
When it comes to financing your first home, you may think that the best way of obtaining a mortgage is to follow others who have already been in your shoes. While this can be helpful on some occasions, the people you ask for help may offer you recycled information about mortgages, which is much more myth than factual.
Falling for these misconceptions will only dissuade you from the right choices and professionals, which are more beneficial to your homeownership dreams. To help you separate fact from fiction, Vic Lehan & Associates has debunked three of the most widely believed myths about mortgages.
Myth 1: Getting a slightly lower interest rate will save you thousands of dollars
This is only a rumor. While having a lower interest rate helps, it is not the ticket to saving a significant amount of money. Here are two simple ideas that can save you a lot of money on your mortgage. First, set your payments at weekly or biweekly accelerated; by doing that, you will make an extra month of payments each year. Secondly, make additional payments on your mortgage when possible. These two actions help to shorten the life of the mortgage and save you thousands.
Myth 2: Banks are the best place to get a mortgage
Banks have a huge advertising budget to persuade you to see them as the answer to everything financial. On mortgages, believe it or not, banks are only making a sliver of money because the interest rates are so low. But by having your mortgage, they then have access to you as their ATM. That is because they can sell you all kinds of other products that earn them a lot of interest, in the form of credit cards, personal loans, lines of credit, insurance, and investments. Additionally, their mortgages generally come at higher interest rates than a mortgage agent or broker has to offer. But the big difference is that they don’t have the choices that a mortgage broker would have. At the bank, you have only one mortgage option. And, if you want to leave them before your contract is finished, the penalty is likely to cost you thousands of dollars.
Myth 3: Try to pay off mortgage debt more quickly than non-mortgage debt
While I am not saying don’t put extra money on your mortgage, it is the lowest interest debt that you have. Especially with today’s ultra, ultra-low mortgage rates. If you have credit cards, loans, lines of credit, etc., they have a far higher interest rate than your mortgage. So if you have worked overtime and have an extra $500, where could you put that money? You could put it on your mortgage and save 2% for every dollar, OR you could put it on a credit card and save 20%. I think you know what makes more sense. The way to reduce debt and pay less interest is to put extra money on the highest debt, then the second-highest, then the third-highest, etc.
If you’re looking to steer clear of more mortgage myths like these, reach out to Vic Lehan & Associates. As the longest-running mortgage agent in Leamington, Ontario, I have over two decades of expertise and knowledge of the housing market. I aim to find you an optimal mortgage solution so that you feel confident when securing your dream home. I will assess your needs and educate you on the various mortgage options and the market condition so that you are matched with a solution that meets your needs. I offer first time home buyer mortgages, mortgage refinances, mortgage renewals, bruised or bad credit mortgages, private mortgages, and other mortgage services to clients across Leamington, Kingsville, Harrow, Essex, Wheatley, Windsor, and all across Ontario.
For a complete list of my mortgage services, please click here. If you have any questions about mortgage financing, I’d love to hear from you, please contact me here.