The Mortgage - Product Price and Service

The Price

Mortgages are viewed by most consumers today as mere commodities. Often the only consideration is the price, while recognizing little, if any, differentiation between competing mortgages and mortgage lenders. While the price of a mortgage, the interest rate, is one of the most important factors when deciding on a mortgage company, consideration should also be given to the mortgage product and service issues.

In today's market it is possible to negotiate a rate that is better than the financial institutions current posted rates. Success depends on the type of property being mortgaged, your credit status, and access to complete information on all financing alternatives. Financial institutions may be willing to accept a lower rate on the mortgage if there is potential to begin a business relationship with a new client that will result in other opportunities. Your mortgage consultant can advise you of the best deals in the market to suit your circumstances, and can negotiate in your best interest.

The Service

Whether you are purchasing your first home, or are moving up - down - or across, it is essential that your mortgage consultant have the expertise and experience to assist you in the transaction. You'll need sound advice and attention to the details. A good mortgage consultant will work with your Realtor to ensure that the best financing plan is available on time and as agreed. Your mortgage consultant should have the knowledge to advise you on your mortgage financing options, mortgage insurance, legal issues pertaining to the mortgage, and government and private policies and programs. They must be familiar with the local real estate market and be able to work in concert with the other professionals involved in your purchase process. Most importantly they will have to commit the time to communicate with you, your family and your representatives.

During the course of the mortgage term your mortgage consultant should be available to advise you on mortgage management issues to save you money, time, and unwanted risk. You'll have questions, they'll have the answers.

The Mortgage Product

In recent years mortgages have become far more flexible. Product features such as accelerated repayment plans, mortgage portability options, and early renewal features, can save you thousands of dollars. Be sure to discuss these options with your mortgage consultant. If the mortgage is portable, is that nationally or only locally. If the mortgage is pre payable, what are the maximums and, more importantly, what are the minimums. Can you early renew, increase the mortgage, or extend the term out. Are equity lines of credit available so that your can access equity when you want without re application and additional legal fees. What fees will be charged now and for future services. Finally, discuss what payout penalties or late fees are charged, how are they calculated.

Product Feature	1990s	1970s
Term Options	Closed, Open and Convertible mortgages are available. Convertible offers lower rates than same term open mortgages. They also allow individuals to change to a closed term or another convertible term without penalty.	Only five year closed mortgages were available.
Pricing Plans	Fixed Rate, Variable Rate, Multi-Rate, Rate Capped,	Only five year closed mortgages were available.
Terms Available	6 month - 1 Yr - 2 Yr - 3Yr - 4Yr - 5Yr - 7Yr - 10Yr. Split and staggered Terms	Only five year closed mortgages were available
Payment Plans	Monthly - Semi Monthly - Bi Weekly - Weekly - and Accelerated.	Only monthly payment plans were available
Interest Rates	Discounts of one quarter to a full percent off of posted rates.	All mortgages were at posted rates
Prepayment Provisions	Double up your payment features. 100% monthly increase and/or 20% annual balloons allowed, without penalty.	Closed mortgages, seldom allowed for prepayment or accelerated payment.
Flexibility Options	Portability Early Renewal Increases	A sale of a residence could trigger a full Interest Rate Differential of interest penalty. Early Renewal, extending the term and averaging the rates was not available. Increases of mortgage at existing rates seldom was offered.