The simple answer is that many lenders have posted rates which they charge to clients who often do not realize that lower rates are available. They offer the posted rate to their client and if the client accepts that rate they have a very profitable mortgage.
Let’s look at an example of the difference to a mortgage customer between posted rate and the current best discounted rate being offered for the same term.
For our example let’s assume a mortgage of $250,000 for a 5 year term amortized over 25 years. A quick scan of today's (October 9th, 2008) rates shows a typical posted rate for such a mortgage at 5.5%. Based on that rate a mortgage customer would have payments of $1,524.52 for 5 years. At the end of 5 years the remaining balance would be $222,935.77.
For the same mortgage at the current lowest rate of 3.84% the payments would be $1,293.46. This is a savings of $231.06 per month. In 5 years the total savings is $13,863.60. At the end of 5 years the remaining balance on this mortgage would be $217,023.99, which represents a further savings of $5,911.78.
The total savings available at discounted rates is $19,775.38. The financial institutions have a very
important reason to offer posted rates.
Your mortgage broker will save you many thousands of dollars by offering you only the very lowest rates available for your mortgage. Remember your mortgage specialist works for YOU not for the banks.
For more information about this or for any other mortgage topic please call at 374-2222 or e-mail: