Mortgage Questions? Mortgage Architects have answers!

Most people who have a mortgage have questions that come up over time. With the mortgage borrowing rates posted on your banks front door going up and down it seems at the same time it can be a bit confusing.

In most cases those posters are made up my marketers who probably understand less about mortgages then you do.

In reality the home owner is focused on getting rid of the mortgage by paying it off faster than the lender would prefer. You have heard of mortgage burning parties when the home or farm owner finally gathers their friends and family around them burns the paper mortgage document because it is paid off. Home owner are certainly happy, but the lender who makes money by lending money certainly wished their relationship had not ended so soon.

In general many people take advantage of making extra payments to bring the principal amount borrowed down faster. The belief and it is correct, that the sooner it is paid off, the cheaper it will be.

But borrowers refinance for several reasons: to reduce the rate; reduce payments, reduce risk of future rate increases, and to sometimes raise cash.

Making extra payments has the effect of shorting the life of the mortgage which of course reduces its total cost. This most people understand instinctively because it is obvious that the shorter the mortgage is the less interest you pay and thus the cost must be less.

Mortgage Re-financing as a strategy to lower the cost on the other hand can work out if amount saves is less than the cost of re-financing and fees related to paying out the current mortgage.

The only way to answer those questions is to get the advice of a certified Mortgage Broker like Kelleway Mortgage Architects in Edmonton. 

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