Mortgage clients constantly tell me “I need the best mortgage rate. What rate do you offer?”
While the client is always right, and we always provide the best rate and terms, we do convey the need to look at the “extras” when selecting the best mortgage. Extras include:
- Low or no prepayment penalties
- Generous pre-payment privileges
- Cash back
- Cash back clawbacks
- Free home warranties
- Professional mortgage planning
- Low lender fees (if applicable)
- Appraisal cost
- Portability
- Missed payment flexibility
Clients are attracted by even a 0.1% savings in mortgage rates. But when you do the math, the relative importance of the “extras” become clear. 0.1% savings on the typical 5-year $250,000 mortgage equates to:
- A difference in monthly payment of only $14
- A savings of just $346 over five years on your mortgage balance
By choosing the right mortgage, just one of the extras here above could offset the interest rate 10 times over. Think about that next time you’re mortgage shopping.
