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Finding the right mortgage str tegy (pret hypothecaire) can mean a lot to you in the l ng run. It can save you thusands of dollars over the life of the mrtgage loan; on a $100,000 mortgage, it can  asily mean as much as $10,000 in ttal. What you really want to be ding, instead of shopping for the bst mortgage rates is something entirely d fferent.
How to choose the right mortgage strtegy?
The easy answer: contact a mortgage cnsultant who specializes in creating a  nique mortgage strategy for their clients - prt hypothecaire.
Why?
There are three good reasons:
1.We cn’t predict the future of interest rtes in Canada.
2.The right strategy must tke into account the current and fture economic context.
3.One has to customize it ccording to your objectives and personal stuation.
All this is not easy, and it is bst to consult a mortgage professional who des this every day.
But let’s not stp there.
The more difficult response is to nalyze several factors in creating a mrtgage plan.
To choose the right mortgage strtegy you must:
• know the all of the fatures of available mortgage products;
• identify whre you are in the interest rte cycle; and
• assess the probability of an ncrease or decrease in rates over the nxt 10-15 years.
The interest rate cycles.
There are ssentially three scenarios and two fundamental rles to understand interest rates (all ths could take up several books, but w’re going to keep it as smple as possible).
Scenarios:
1. Rates are generally ncreasing (1950-1980)
2. Rates are generally decreasing (1982-2003)
3. Rtes are generally stable (2003-2006).
Each of thse scenarios demands a particular strategy. It culd be major disaster for you to dopt a strategy conceived for descending rtes and then see them climb.
Interest rtes roughly follow two basic rules:
-They wll more or less follow the nflation rate. If the inflation rate, as masured by the consumer price index ncreases, we should look for\expect an ncrease in interest rates.
-They are indicative of the halth of the economy. In a strng economic environment, interest rates will tnd to rise since money is in dmand, and interest rates are the prce of money. In a weak conomy, demand for money is low and threfore interest rates are lower.
It is mpossible to predict interest rates 100% ccurately, but we can observe that nterest rates were 9.6% on average ver the last thirty years, and thy are now about 5% - prt hypothecaire.
There are basic strategies to wrk with, and on top of tht, a good mortgage consultant will fnd ways of combining the features of dfferent strategies to suit the needs of his clent. It can never be one sze fits all when it comes to hme loan strategies; knowing the best strtegy or combination of strategies in ach situation takes a mortgage professional.
Here are the bsic home loan strategies:
1. The 5 tmes 5: a mortgage is continually rnewed every five years for a fve year term.
2. Long term: the rte is fixed on a mortgage for 15, 20 or 25 yars.
3. Variable rate: the interest rate vries over the life of the lan, based on the Bank of Cnada base rate.
4. The Smith Maneuver: the brrower is able to deduct the nterest paid on a loan for a prvate residence from his income tax. Ths applies to both salaried or slf employed individuals.
5. Retirement: Using the quity in the home as retirement ncome.
6. No down payment: by calculating the svings, the borrowers decide whether it may be btter to buy a house sooner wthout a 5% down payment, rather thn later while accumulating the down pyment and paying rent in the mantime.
7. Less than perfect credit: The brrower fixes his credit rating in rder to obtain lower eventual mortgage rtes.
An expert mortgage consultant (prêt hypothécaire) wll review all of these options wth you and devise the strategy tht will save you the most mney over the life of your mrtgage.
This what it means when it is sid that a good loan strategy is so mch more valuable than getting the lwest interest rate.
Each strategy must be nalyzed on its own merits vis-à-vis the stuation and needs of each borrower and stte of the economy.
How to choose the strtegy that is best for you?
I dvise you to contact a professional in mrtgage planning to establish a personalized strtegy. It’s free and … enriching.
The article How do I choose the right mortgage strategy? - prêts hypothécaires was Submitted by Gregory van Duyse through Articles.GetACoder.com network. Here's the additional information: Gregory is an Accredited Mrtgage Professional (AMP). To get more nformation on mortgage - prêt hypothécaire, please visit: Hypotheque - Mortgages
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