How We Plan Mortgages
A mortgage is more than an interest rate.
When people compare mortgages, the first thing they often look at is the interest rate.
That makes sense. The rate affects your payment and the amount of interest you pay.
But a mortgage is a contract that can affect you for several years, and the lowest rate isn't always the only thing worth considering.
Our job as a mortgage planner is to help you look at the whole mortgage, understand the trade-offs and choose an option that fits your situation and your plans.
Step 1: Understand where you are going
Before looking at mortgage products, we want to understand your situation.
Are you buying your first home?
Moving from your current home?
Planning to stay for a long time, or do you think you might move in a few years?
Do you expect your income or financial situation to change?
Do you want to make additional payments toward the mortgage?
These questions matter because the mortgage that makes sense for one person may not make sense for another.
Your plans help determine the mortgage.
We don't believe in choosing a mortgage first and trying to make your plans fit around it.
We prefer to understand what you're trying to accomplish and then look at the mortgage options that may support those plans.
Step 2: Make sure the mortgage fits your budget
Getting approved for a particular mortgage amount doesn't necessarily mean you should spend that much.
We'll talk about what you qualify for, but also about what you're comfortable paying.
Your mortgage is only one part of owning a home.
There are property taxes, insurance, utilities, maintenance and all the other costs that come with home ownership.
We want you to understand the numbers before you start shopping so you can look at homes with a realistic budget.
Step 3: Compare the mortgage, not just the rate
Once we understand your situation, we'll look at the mortgage options available to you.
This is where the details become important.
We'll help you compare things such as:
Interest rate
Obviously, the interest rate matters.
A lower rate can reduce your payment and the interest you pay, all else being equal.
But it shouldn't automatically be the deciding factor.
Prepayment privileges
How much can you pay down each year?
Can you increase your regular payment?
Can you make lump-sum payments?
If paying your mortgage off faster is important to you, these features can be significant.
Mortgage penalties
What happens if you need to break the mortgage before the term ends?
Penalty calculations can vary considerably between lenders and mortgage products.
It's not something most people think about when they're signing their mortgage — but it can become very important if your plans change.
Portability
If you sell your home and buy another one, can you take your mortgage with you?
And if you can, what are the conditions?
This can matter if you expect to move during your mortgage term.
Terms and restrictions
Different lenders can have different rules and restrictions.
We'll help you understand the important differences rather than assuming two mortgages with similar rates are essentially the same.
Step 4: Look at the mortgage in the context of your plans
This is where mortgage planning becomes more than rate shopping.
Imagine two mortgages:
Mortgage A has a slightly lower interest rate.
Mortgage B has a slightly higher rate but provides greater prepayment flexibility and different penalty terms.
Which one makes more sense?
There isn't a universal answer.
It depends on what you are likely to do with your mortgage.
If you plan to stay in the home for a long time and make only the regular payments, one option may make sense.
If you expect to make large lump-sum payments, move within a few years or potentially refinance, the features of the mortgage may become much more important.
Our role is to help you understand those trade-offs.
Step 5: Make the decision together
We don't believe our job is to simply tell you which mortgage to take.
Our job is to give you the information you need to understand your choices.
We'll explain the differences, answer your questions and give you our perspective based on your situation.
Then we'll make the decision together.
You should understand why you chose your mortgage — not just what mortgage you chose.
Step 6: Keep the plan in place after the mortgage funds
Mortgage planning shouldn't stop when you get the keys.
Your circumstances can change.
You might receive a bonus, inherit money, change jobs, decide to move, buy another property or simply decide that you want to pay your mortgage off faster.
That's why we encourage clients to keep the mortgage conversation going.
Sometimes the right decision is to make a change.
Sometimes the right decision is to leave the mortgage exactly as it is.
The important thing is to understand your options before you act.
Our Mortgage Planning Philosophy
There are a few principles that guide how we work with clients:
Understand before you decide.
We want you to understand the mortgage before you commit to it.
Look beyond the rate.
The interest rate matters, but the other features of the mortgage can matter too.
Plan for what might happen next.
Your mortgage should make sense not only for today, but also in the context of your plans.
Don't borrow simply because you can.
What you qualify for and what you are comfortable spending are not always the same thing.
Ask questions.
There are no bad mortgage questions. If you don't understand something, We'd rather explain it than have you sign something you aren't comfortable with.
Make informed decisions.
Our goal isn't to make the decision for you. It's to help you have the information and perspective to make it yourself.
The goal isn't just a mortgage.
The goal is to have a mortgage you understand, that fits your situation and supports what you're trying to accomplish.
That's what we mean when we call ourselves Mortgage Planners.