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Getting the Best Mortgage Rates

You're probably not too excited about the prospect of doing some legwork on the topic of mortgages, so LoanBanx is here to help, since not only do you get valuable educational information, but we also offer the option for you to have lenders compete for your business. What you should still do, however, is educate yourself on the basics, which could be worth thousands of dollars of savings in the long run. Hmmm, suddenly the idea of doing a little homework doesn't seem so bad, does it?

A lot has changed in the mortgage world over the past few years. Here are some things to keep in mind:

There is greater choice in lenders.

Consumers need not restrict themselves when shopping for a mortgage. Lenders that have entered the Canadian market over the past few years include companies like ING Direct, PC Financial, CitiFinancial, HSBC, Citizens Bank, MCAP, and Maple Trust, to name just a few. Include the big banks, mortgage brokers, even private lenders into the mix and you have a lot of choice.

Everyone offers something different.

One lender may offer a great variable rate mortgage as their hallmark product. Another could have an unbeatable one year rate. Still another could have be offering a terrific five year rate. This is why shopping around becomes so important.

You don't always get the best rate up front.

Frustratingly, when it comes to lenders and mortgage rates, there's the "posted" rate (like the "sticker" price of a new car) and there is the best rate, which can be significantly lower. You basically have to try to negotiate your way down to find the best rate. Some lenders claim to tell you their best rate up front, but this may or may not be true. Be prepared to negotiate.

Increased marketing = increased confusion.

There is a LOT of information out there. Every lender offers a different type of variable rate mortgage, and every lender will try to convince you that they offer the best package. For the average consumer, it can get pretty confusing pretty quickly. The best advice is to learn as much as you can (and this site will help) as well as be assertive in asking questions and reading all of the fine print.

How to shop around

A good rule of thumb too is to start with your own bank as a benchmark: find out what they can offer you, get it in writing, and then shop around. When shopping around, start by simply making some phone calls and get some rough quotes over the phone rather than giving full applications everywhere. Bear in mind too that you can talk to two different people at the same lender and get two entirely different answers to the same question. A mortgage broker can also be consulted.

If you find a rate that is better than what your own bank offered, stick with them. If your bank turns around and offers to match the rate you got elsewhere, ask yourself why they wasted your time by not giving you their best rate in the first place! Use your own best judgment in dealing with this situation.

You may also want to check out the article Factors Affecting Mortgage Rates for more information on how rates are determined in general.

The bottom line is, taking the time to do your homework and shopping around will get you the best rate and the best mortgage to suit your needs.