If you are looking at buying a home or refinancing your existing home, you have probably been having a lot of conversations about interest rates. If you enjoy talking about interest rates, fine, go ahead. It's like talking about the weather: it won't make any difference, but it gives you something to talk about.



The simple truth is that the variance in interest rates from one lending institution to another is so small that it will not make a big difference in the total cost of your mortgage.

As a matter of fact, the difference is only about .06%, which is a saving of $41.12 per year on a $100,000 mortgage.

With all the emphasis lately on credit scores and credit ratings, it is surprising that a lot of people still believe that shopping around for the best rate will make a big difference. Credit scores are based on a consumer's credit worthiness: whether you pay your bills on time, if you have ever defaulted on a loan, whether other lenders have been willing to lend to you, etc. A credit score of 500 will mean you are not a good risk, and a credit score of 700 will mean you are a better risk. Lenders set their rates for a consumer based on this score. That's all there is to it. So apart from a few points difference, all the banks are going to quote the same rate for a person with a score of 650. Lets? look at that interest rate savings of $41.12 per year. If you look around for more than 6 hours, you are paying yourself only $6.85 per hour for your time.

The only way to have a real savings on your mortgage is to have an overall mortgage strategy. There are many types of mortgages being offered, and the combinations of benchmark rate used, terms of payment and duration of loan can have a great overall impact on the loan over time. This is what is more important to look at. Finding the mortgage expert who will discuss more than just the interest rate, but instead will understand the economic markets and examine your financial situation and longer term plans will achieve much more savings on your mortgage. Choosing the right mortgage strategy can save you tens of thousands of dollars, as compared to the $40 cited above that can be saved on a lower interest rate.

How can you find out the best strategy? Working with a mortgage consultant who understands the economic markets, who works closely with you, who understands your needs and particular circumstances, and who combines this knowledge and information with the best rates available is the secret to finding the right mortgage strategy. Understanding this concept can save you tens of thousands of dollars in home loan costs, rather than tens of dollars.

Not convinced? You can get more details and understand how this phenomenon can be true by reading more articles on our website.