Have you ever stopped to think how your bank decides what rate to offer you when you apply for a Variable Rate Mortgage? Banks may offer a great initial rate when you first bring them your business, but the question that you need to ask them is what rate will they offer you when you decided to lock in? Do they guarantee you will be able to lock in at their most discounted rate for the closest term remaining or is the decision left solely up to the discretion of the loan officer and their interpretation of your relationship with the bank? Is it, for example, 1% off the posted rate in one year or posted open after 3 years? Do they put this in writing? You could end up paying a much higher rate than what the market is offering. It is important to find out this information as the difference between locking in at the posted rate vs. the discounted rate can cost you literally thousands! Think of it this way, if you have a$250,000 mortgage amortized over 25 years; you would end up paying over $18,000 in additional interest in just 5 years.
As you can see, getting the best possible rate you qualify for is important as it can potentially save you thousands of dollars in interest. A Mortgage Broker has access to a number of lenders who offer a guarantee of their lowest rate for a 3 year or longer term when you lock in. A Mortgage Broker will also have some negotiating power with the lenders and would have access to rate specials and promotions. By working with a Mortgage Broker, you can be assured that you are getting the best possible rate for your VRM that you are eligible for and also be guaranteed a good rate for when you lock in.
Please call me !!
Lisa J. Gryba, AMP
Accredited Mortgage Professional