In life many of us work hard to become financially independent no matter how hard the road is to travel. One of the most important steps to achieving the goal of independence is to limit the expenses you can control. Most people assume this means cutting down on little things such as the daily coffee or eating lunch out, but true financial control requires putting a lid on more than just the daily expenses. You also want to lower the cost of big ticket items that provide you with assets, while at the same time accumulate debts.
The most important financial decision most of us can make is to purchase a home and become landowners. However, unless you have $500,000 sitting aside in a bank account, you will likely require a mortgage to secure the property and complete the purchase. The features of a mortgage loan such as the size, the deadline date, and how to pay it off can all vary considerably depending on your credit history, and ability to negotiate terms with a mortgage lending firm.
The best way to make the mortgage more affordable – and subsequently, negotiate prudent financial terms – is to acquire the best mortgage interest rate that you can leverage. A mortgage rate should be catered to your unique financial needs in order to minimize the amount of interest you pay on your home financing loan. At the same time, a lower interest rate allows you to budget regular monthly mortgage payments that won’t interfere with your ability to meet your other monthly obligations such as credit card bills, utilities, and your cellphone.
The traditional way to apply for a mortgage has been a consistent back and forth negotiation with potential lenders in order to negotiate the terms of the home financing loan. While mortgage firms prefer to stick with traditions, it is far from convenient on you as the mortgage applicant. This process requires you to spend more of your personal time meeting with lenders, and in all likelihood costs you more money on your loan than is necessary because lenders prefer to dictate what they feel is a fair mortgage interest rate. This is particularly true if you are a first time homebuyer, where lenders feel they can rely on inexperience to charge a little extra.
The good thing about traditions is eventually they become outdated. The internet revolution has made online shopping convenient and popular for many of us, and the one-stop shop experience now applies to mortgage applications. There are now comparison websites such as LowestRates.ca which allow you to compare the best mortgage rates from some of the leading providers across Canada. This service allows you to save time on your search, and money on your mortgage – securing the best possible deal on your homeownership plans.
It’s always better to save money where you can in order to become financially independent, and now the internet is a valuable resource to allow you to do just that.
Here’s something few do – when we ‘fixed’ the rate for 90 days on our last mortgage, rates dropped again before we finalized. Our lawyer advised us to renegotiate the final mortgage rate. I was a bit taken aback – I didn’t that that was actually realistic (even though it’s clearly offered).
I did call my mortgage broker and ask him to lower our rate based on the drop over the last month or two. I was given the distinct impression he wasn’t at all happy over doing it, but he did do it.
I looked at expanding into the mortgage business a while ago (I didn’t proceed), with an eye to offering low rates. It became clear that the individual broker has a large say in the rates, the higher the rate they charge the higher their commission. And there’s huge industry pressure to not cut premiums. I was offered examples of brokers who cut rates by cutting commissions and was told these people were outcasts in the industry.
I think that’s why it’s important to shop brokers (same thing in the life insurance industry, but because of product instead of commissions).