One VERY important thing to remember when you are starting to mortgage shop is the unexpected TOUGH fine print that can come if you have to break your terms early!
TRUTH: Mortgage rates are near record lows, but brokers (including myself) say those shopping around for a loan should look beyond the rates you’re being offered and pay close attention to how much it will cost to break their mortgages.
Because the simple TRUTH is: Life happens…. Divorce, a desire for a new and bigger home or an opportunity to move to another city for a new job, all may prompt people to want out of a five-year mortgage early, and the penalties vary depending on the type of mortgage they have and the lender involved.
Focusing on the rate may save you a few bucks on your monthly payment, but if don’t pay attention to the penalty fees, it could cost thousands more if you have to get out of the mortgage early…..
The penalty for breaking a closed mortgage is generally the greater of three months interest on the remaining balance or the interest for the remainder of the term on the remaining balance – all calculated using something called the interest-rate differential- To read more click here 🙂
As always, if yo have any questions, never hesitate to get in touch.