Just Lynn

One woman. One name. One hell of an attitude!

mortgage shopping

Written By: witchypo - Nov• 05•10

When I bought my house a few years ago, I signed the mortgage without really understanding it. I mean, I knew someone was lending me money and that I’d probably end up paying them 2 ½ times that amount back, but I told myself it was an ‘investment’ , not a ‘debt’, and moved on.

 With all the hype and offers out there, though, I couldn’t help wondering if I could get a better deal. It’s important to remember, though, that ‘deal’ is a relative term and you can’t know how ‘good’ or ‘bad’ one is until you compare it to your current mortgage and others.

Of course, you could read the contract yourself, but they aren’t exactly ‘riveting’ and most of us lack the financial and legal knowledge to understand them if we tried. Luckily, you can call your mortgage broker or current lending institution to review your mortgage in everyday language. You can also go online and talk to people to learn about a lender’s reputation and how they ‘stack up’ against other companies.

 

Some of the questions I asked my current lending institution are…

 

How much did I originally borrow?

How much do I currently owe?

What’s the over all length of my mortgage (i.e. 15, 20, 25, etc. Yrs)?

What’s the current interest rate and renewal term (i.e. 5% and 5 yrs)?

What fees will I incur if I take my business elsewhere (administration, pro ration on insurance, legal fees, etc.) ?

Am I making bi-weekly or monthly payments?

What ‘perks’ does my current company offer (i.e. home warranty, online access to mortgage information, ability to make ‘self directed’ changes to payments, portability, etc.)?

 

Once you understand your current mortgage a little better, it’s time to look at what other companies are offering. When I did a quick survey most seem to be offering ‘cash’ or ‘cash back’ to switch and rates averaging 3-5% for 3-5 years and the average over all length of 20 to 25 years.

 

Of course that sounds like a ‘good deal’, but you’ll want to ask lots of questions and read the small print. (I know! It’s boring… but it’s important!) Some of the questions I asked are…


  • Will you run a credit check on me to determine whether or not I’ll qualify for a mortgage now?

  • What’s the lowest rates and average terms you’re offering?

  • What ‘perks’ do you offer with your mortgage products?

  • How does your ‘cash’ offer work and will I have to pay that cash back?

I wasn’t surprised to find there are limits on how much banks will ‘give’ and that it may not be enough to cover all the fees you’ll incur to switch. I also learned that while lending institutions say they’re ‘giving’ you money, they will insist on all or part of it being paid back if you change your shiny new mortgage.

 

Can you say ‘claw back’ boys and girls?

 

In my own case, when I’d compared what I’d pay my current lender in interest and fees over my 5yr term to what I’d pay another bank and considered the ‘out of pocket’ fees and differences in practices and policies, I learned their ‘deals’ would take and average of 4 ½yrs to be a ‘wash’ and a considerable chunk of cash I don’t have now.

 

Rather than being upset, though, I was pleased. I’d taken the opportunity to educated myself a little. I’d learned that I already had a ‘good deal’, so I won’t ‘stress’ when I see all those adds and offers. I also learned some ways I can save myself money in the long run and figured out that – like my mortgage broker – I can be a ‘smart chick’ too!

 

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