Is the Best Mortgage Rate Important?

Mortgage clients constantly tell me "I need the best mortgage rate.  What rate do you offer?" 

While the client is always right, and we always provide the best rate and terms, we do convey the need to look at the "extras" when selecting the best mortgage.  Extras include:

• Low prepayment penalties
• Generous pre-payment privileges
• Cash back
• Cash back clawbacks
• Free home warranties
• Professional mortgage planning
• Low lender fees (if applicable)
• Portability
• Missed payment flexibility

Clients are attracted by even a 0.1% savings in mortgage rates.  But when you do the math, the relative importance of the "extras" become clear.  0.1% savings on the typical 5-year $250,000 mortgage equates to:

• A difference in monthly payment of only $14
• A savings of just $346 over five years on your mortgage balance

Just one of the extras above could offset this 10 times over.  Think about that next time you're mortgage shopping.

Comments

[Cally]

I think your calculation for 0.1% savings on 250K the mtg should tell the client totally savings for over 5 yrs. you said mthly difference is $14, so 14 times 60 payments equals to $840 plus $346 savings on mortgage balance at the end of the term, so total savings should $1186. if you tell the client 0.1% rate discount means over $1000 savings, i think there would be another story.