You Don't Need to Cry

Several years ago I had a lady call me and ask me to get her out of her mortgage.  She had a fixed rate mortgage with a home equity line of credit (HELOC) that grew as she paid down her mortgage. I asked her how that was going as many people find they can pay down their mortgages so much faster and they are very satisfied. Her response was not at all happy. She was close to tears.  As her mortgage balance went down and her HELOC increased she would go out and spend more money, on vacations, furniture etc. The result was that after 5 years she had owed just as much now as she did back then. On top of that the person who put her in the mortgage never explained that there was a monthly fee similar to a bank account fee. It wasn’t much but it peeved her that she had not been informed.

  My first question was “ Did the bank rep ask you if you were a spender or a saver?

”no,” she said I’m more of a spender than a saver.”  Now I understood her problem . She was meant to have a regular fixed rate mortgage.  My next question was “ are you paid every two weeks or monthly?  I then showed her an amortization table with monthly payments and bi-weekly side by side and showed her that she could shave 3 ½  years off her 30 year amortization by switching to bi-weekly payments.  What a relief she felt when I was able to put her in a regular mortgage.

    The morale of the story – mortgage brokers ask lots of questions in order to avoid problems in the future. Answer their questions true fully  and you will be happy with the results. 

for more information contact David Cooke - http://davidcooke.ca