A new buzzword flying around is mortgage planning. What is it? Is it expensive? Doesn’t every mortgage come with a plan?
Mortgage planning is good for everyone who owns or is planning to own a home. Rather than just take out the loan that the local loan officer is promoting, a mortgage planner discusses the customer’s goals, short and long term, to arrive at a strategy that will best serve those goals.
For example, a customer who knows that they will only be living in the home that they are purchasing for three or four years, should not pay the higher interest rate associated with a 30-year fixed mortgage. Especially, when it is so cost-effective to buy the rate down into the high 3% range.
Another example is the customer who is looking to aggresively pay down their mortgage using biweekly payments. A planner could point out that the goal could be accelerate for minimal cost by using a 15-year fixed mortgage at a lower rate, rather than the traditional 30-year fixed. The change in payment would be no more than a couple bucks a month.
Finally, mortgage planning is no more expensive than a traditional mortgage. The loan officer will assist you in this planning while setting up your mortgage. If your loan officer is not asking you about your goals, just giving you the day’s 30-year fixed rate and his fees, you may wish to look to someone who will earn their compensation… and someone who has your best interests at heart. Please feel free to call me with more information.