To listen to the average person discuss their mortgages, you would think that the only thing that influences the total cost of their mortgage is the rate. You've heard it, at parties, at over the fence conversations: "What rate did you get on your mortgage?" "I got a mortgage rate (taux hypoth?caire) of ____%". Yet studies have shown that, given the same parameters (credit history, length of mortgage, payment terms, etc), the average difference between mortgage rates is about .06%. On a $100,000 mortgage, that amounts to $41.12 per year.

We all know by now that interest rates charged on mortgages (pr't hypothecaire) and all other types of loans are determined by credit ratings. Why, then, with all the discussion about credit ratings and credit scores, are we still so na've as to believe that one banker will look at our credit rating and say 7%, and another will look at that same exact credit rating and say 6%? Credit ratings are based on the risk the bank faces when it lends money to you (and, more importantly, the risk it faces about whether it will get paid back). There is a higher premium over their cost of funds if they risk that you will pay slowly or not at all, and a lower premium if you are a good risk. As a result, the range of rates, based on the same type of credit rating, is very small. It hardly seems worth the trouble to save such a small amount, does it? Especially if you, like most people, look all over the internet for hours to find out all of the rates that are being offered out there.

The only way to have a real savings on your mortgage is to have an overall mortgage strategy. There are many types of mortgages (hypoth?que) being offered, and the combinations of benchmark rate used, terms of payment and duration of loan can have a lot of influence on the loan over time. This is what is more important to look at. Finding the mortgage professional who will discuss more than just the interest rate, but instead will understand the economic markets and examine your own situation and longer term plans will yield much more savings on your mortgage. Choosing the right mortgage strategy can save you tens of thousands of dollars, as compared to the $40 cited above that can be saved on a lower interest rate.

How can you find out the best strategy? Working with a mortgage broker (courtier hypoth?caire) who understands the economic markets, who works closely with you, who understands your needs and unique situation, and who combines this knowledge and information with the best rates available is the secret to finding the right mortgage strategy. Understanding this concept can save you tens of thousands of dollars in mortgage costs, rather than tens of dollars.

If you want to understand more about this kind of an idea, continue on to the main article.