Don'y Believe the Hype!

Don't Believe The Hype!

by Darrin DeRoches April 19 - 25, 2012

Calm before the Spring Storm. I was talking with a few mortgage brokers this week and they all were saying the same thing. Things are slow. The weather and 2.99 per cent mortgages have caused a little stir in the past couple of weeks but the market is still quiet. The mortgage brokers were all busy when the 2.99 per cent came out and people did flock to them to be pre–qualified but are not presently looking. One broker called clients and explained that the 90 days is coming close and if they do not use it the rate will go up and the client was not motivated by this.The bank rate was just announced this week as staying the same but with a cache that they are thinking of raising it soon. The press have been saying this every time it is announced since they have nothing else to report on “the bank rate –same!” pretty boring. “It may go up” stop the presses!     While I am writing this I actually just took a call about the “no money down” mortgages and had to explain that of course your credit score must be high and yes you do pay higher rates to pay back the down payment. Nothing is free in this world and when everyone is knocking the “no money down” or 2.99 per cent mortgage has conditions – what the hell do you think it is? The conditions on the 2.99 per cent mortgages are no different than the other low rate mortgages we have been signing up for in the past. Yes you have to sign a closed 5 year mortgage. You did this five years ago with a 5.1 per cent mortgage and no complaints. Understand that the bank is offering the 2.99 per cent than suggesting you look at the higher rate 2 or 3 year mortgage and everyone is on the band wagon that a closed 5 year is bad. Don’t, don’t, don’t believe the hype! Heehaahaw!     The spring market is about to bloom and these pre–approved mortgages at 2.99 per cent may be expiring but there are still more out there to be had. It is important to listen to advice from those who are not making money on the product. The bank tells all of its employees the 2.99 per cent mortgage is bad and they spread the gospel, some mortgage brokers even tow the company line since they get paid less on the deal. People will argue that most people break or re–mortgage every three years so why lock into a 5 year mortgage. Why? Cause it is only 2.99 per cent! If you find yourself needing to get equity out of the house before the mortgage matures – get a line of credit. Banks want you to re–mortgage to take money out since they make more money on that product than they do on a line of credit.       Think ahead and make your decisions wisely. The spring market will come fast and furious so be ready, get pre– approved, work with a good broker and you will be ready to compete in a market that will be moving fast! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.