The simple truth is that the variance in interest rates from one bank to another is so small that it will not make a major change in the total cost of your home loan.
(As a matter of fact, the difference is only about .06%, which is a saving of $41.12 per year on a $100,000 mortgage.
We all know by now that interest rates charged on mortgages (prêt 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 naïve as to believe that one lending institution 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 you money (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. Consequently, 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.
Much more important than just relying on interest rates as the determining factor in choosing your home loan (prêt hypothécaire) is choosing the right mortgage strategy. There are many mortgage strategies that can be used to manage your mortgage costs over the life of the loan. Choosing the right strategy is much more critical in determining costs over time than just using the interest rate as a gage.
Why do banks only talk about interest rates when there really isn't that much of a difference between rates? Because that is the easy way to attract borrowers. Developing an entire mortgage strategy for a customer takes a lot more in terms of understanding and analyzing markets, mortgage products, individual needs and a host of variables. Many bankers and mortgage brokers have neither the time nor the expertise to perform this in depth services for their customers.
Need to know more? You can get more details and understand how this concept can be true by reading the following article.
Gregory writes articles for Informezvous.com - hypotheque and he is the owner of http://www.infohypothecaire.com/ - Pret hypothecaire. To have more information about mortgages, please visit one of his websites:
http://www.infohypothecaire.com
http://www.informezvous.comThis article is free for republishing
Source: http://www.articlealley.com/article_132452_19.html
Keywords: buying a home, conversations, credit rating, credit scores, existing home, home loan, interest rates, lending institution, loans, matter of fact, money, mortgage costs, mortgage strategies, mortgages, right mortgage, risk, simple truth, usi, variance, weather.
