They say that in the information age that knowledge is power. But even in the information age having access to unlimited information including mortgage calculators can make things more confusing than less. The way the bank’s mortgage calculator is set up can mislead and even provide bad mortgage advice if left in the hands of those who are not mortgage experts – which is most of us. Let’s see what is behind the numbers and how we can use this information to our advantage, not the banks.
Bank’s Posted Rates Trap
When shopping for a mortgage – forewarned is forearmed. You do need to know that when you use a bank’s mortgage calculator that they are providing their posted interest rates which are generally 1.5% higher than the best mortgage rates available today. This may seem trivial to some however when we look a little closer, the numbers are telling. On a 250K mortgage, the difference between a posted rate mortgage and today’s best interest rates will cost the borrower an extra $14,000 over the first five years. Do you know why you are leasing a car every five years rather than putting a nice fat down payment on a new one? Well now you know. The bank also knows. Might be why they offer vehicle financing as well.
Mortgage Calculator Misleading
The idea of a mortgage calculator is to give you a general sense of when you will pay off your mortgage given a set of numbers representing your ideal circumstances. The fact that this does not line up with real life does not stop the majority of Canadians from utilizing this tool. What is much more important in the game of life is Mortgage Planning or – what is the plan for our family in a best case/worst case scenario so we are always prepared. A mortgage calculator does not provide this option. It also does not make provision for the changes in the mortgage marketplace that will take place over the next 5, 10, and 15 years which will force everyone with a mortgage to adjust their plan accordingly.
Pay That Mortgage To $0 With A Bullet
Mortgage calculators are the equivalent to your financial planner showing you the Andex Chart for your retirement. This chart was created to show $1 invested in the stock market from 1926 till today and the returns it would have provided. How many people do you know that stayed the course and kept their money invested for the long run. It is the same with mortgages. The only guarantee in life is change. To think that using a mortgage calculator to pay your mortgage to $0 is a pipe dream. In addition and something much more important is to what end are we pursuing this goal. Paying off your mortgage early in Barrie is a lot more difficult utilizing the bank’s system than the mortgage calculator shows. There’s a right way, and then the bank’s way to everything.
Dollars and Sense in Barrie
Utilizing a mortgage calculator is an important step in the home purchase or refinance process. There is no doubt about that. There is however a depth of understanding about the numbers and their implications that is not provided in your typical mortgage calculator. Here is a link to a simple and easy to edit Mortgage Calculator that you can use for a preliminary understanding of the process. What is missing here is the translation of how these numbers affect your specific set of circumstances and the expert insight my years of mortgage experience can provide to make these numbers assist you in your mortgage freedom goal.
As always, I am here to field your Barrie mortgage calculator questions and any other mortgage related queries. Please feel free to ask away below.