Short Term Versus Long Term

When you are looking at townhouses for sale in Oakville, the first thing on your mind is probably finding just the right house. That is pretty normal for people out shopping for a home, but it can also be harmful overall. People forget that there is a very real, very cutthroat aspect to the real estate industry. A lot of people stand to make money off of careless consumers, which unfortunately is the majority of buyers in the real estate market.

The people making the most money off of real estate buyers are the mortgage lending companies. In addition to the mortgage rates they charge, they have literally dozens of different ways to pick your pocket over the term of your loan once you find the perfect piece of Riverdale Toronto real estate. One of those ways is failing to be absolutely clear about the exact terms of your mortgage, or even about what the mortgage actually is. Aside from paying more than double what you bought your house for in interest over the years, you might also think you are in for a great mortgage rate when that is not the case.

This is common with people who are trying to decide between short and long term mortgages. When you hear about a long term mortgage, you might think that you already have one. After all, you are locked in at a certain interest rate on your Brampton homes, a rate which will have them paid off in thirty years. However, in mortgage terms thirty years is much higher than the time period required to have what is considered a long term loan. In fact, a loan anywhere over three years is considered to be long term, and they really only go up to five.

That's area one where the banks will have you fooled. The longest mortgages only run for ten years, and they are fairly uncommon. In fact that length of time is responsible for a lot of Edmonton foreclosures, because the interest rates are so high. After the lengthy period of three years or whatever your long term loan is, expect to have to renew your mortgage at whatever the current rate is.

What the banks are banking on (and yes, they are called banks because they have betting down to a science) is that interest rates will go up as the years go by. That's why you will find that long term loans have higher interest rates than short term, and why they are marketed by the bank as well. By getting the maximum number of people buying Erin Mills homes for sale with long term loans, they can make the most money.

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Saturday, May 18, 2024