Testing the market for lenders

Brandon Scott is a Sherwood Park based mortgage consultant and the author of a weekly column entitled Real Estate Solutions in the Sherwood Park News. This article was originally published on August 10, 2012 The year was 2007. The real estate market was hot, hot, hot. Much like the recent weather we’ve been having, minus the evening thunderstorms and rain showers. It was a record breaking year for home prices and many people became home owners for the first time. Fast forward five years later and those same homeowners now find their mortgage up for renewal with their current lender. Renewing with your current lender is extremely easy. Typically, you’ll receive a letter outlining the new terms and rates available and once you select the option you want, simply mail the form back and you’re all done. Sometimes, however, “easy” can be the enemy of “best.” Just because your lender makes it easy for you, it doesn’t mean you are getting the best deal. A study conducted at the end of last year revealed that 65 per cent of homeowners did not bother to check with other lenders to see if the rate being offered was competitive. That’s an astounding number. More than half of the people surveyed simply renewed with their current lender. Not shopping the market means you could be paying more than you have to for the luxury of doing what is easy. Sure, life is hectic balancing children, work and extracurricular activities; it’s no wonder why the decision is often put off to the last minute. However, can you imagine an extra $4,168.07 in your pocket over the next five years? That’s what a .25 per cent difference on a $350,000 mortgage with a 25 year amortization can mean in interest savings. Those funds could be used to start a child’s college fund, a retirement planning account, or perhaps pay-off a credit card or unsecured line of credit (saving you even more in interest costs). Another reason to get expert advice rather than just checking the box on the lender’s renewal letter is that perhaps your goals have changed or a life-event will soon be approaching that you would like to plan for to ensure you are not choosing a term that limits your options. With so much at stake why, not make the phone call? You wouldn’t drive down a range road at night in Strathcona County without your headlights on; there is too much at risk including the personal safety of yourself and others. The same is true for driving your financial future. With your home being your greatest asset and your mortgage being your greatest liability, why not call upon a specialist to illuminate the path ahead? Reviewing your situation with a trusted mortgage advisor in most cases is free of charge and can provide you with a second opinion. You’ll either have confirmation that your current lender’s offer is fair and meets your needs, or discover there is a better product that will suit your goals. Either way, it’s a win-win situation. Download the current e-edition of the Sherwood Park News