No, what I'm saying is that compared to the current 1.99-2.99% rate in Canada (that the poster claimed), the present rate in the U.S. is not that much higher. A 15 year fixed today is about 3.0%/3.01% (for those unfamiliar with the way rates have to be quoted, the first number is the rate, the second number is the rate if you factor in any points and fees).
The bad thing in the U.S. is that since the rates paid by borrowers are so low, the interest rates on savings accounts are also extremely low.
Much better to invest your money in real estate in an area that's not likely to crash.
When you consider that your Fed bank rate is 0.25% (the smallest positive amount it can be) while in Canada the BoC rate is 1%, all Canadian borrowing rates should be a full 1% higher than US rates.
Yet we have standard 15-year rates at 3% and promo 3-year term rates for
2%.
And our rates are "all in". None of the bullshit extra fees and "points" that are tacked on to your mortgage costs (what the hell are points anyways?).
Bullshit points and fees. Our system is so much more "consumer-friendly" than yours. None of those bullshit fees and points. Retail simplicity and transparency at the banking level.
And credit scores? It's practically unheard of up here in Canada. Ask any Canadian what their credit score is, and they'll just give you a blank stare. Institutional robery at every financial level is what you have in the US.
You don't even know what points are, yet you're here pontificating on all kinds of things related to mortgage rates that are way beyond that. Typical, for the village idiot.
The claim that the same thing doesn't exist in Canada, is obviously BS. Here:
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In Canada, it's called "buying down". In the USA it's called points. With either, buy paying some cash upfront, you lower the interest rate for the duration of the loan. Dial in the lower interest rate that you want in that Canadian calculator, and it shows the buydown, ie "points" that you have to pay.
Per the above, Canada has the exact same thing as our points.
Unheard of to the village idiot. Not unheard of to the mortgage industry and those with a brain:
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"Your Credit Report
A good credit report and credit score are important factors in determining whether or not you will be approved for a mortgage. Here are some simple steps you can take to maintain a good credit history -- and improve your chances of being approved.
What is a Credit Score?
Your credit score is a number that illustrates your financial health at a specific point in time. It also serves as an indicator of your financial past, and how consistently you pay off your bills and debts. This is one of the factors mortgage professionals consider in qualifying you for a mortgage.
How to Check Your Credit Score
To find out your credit score, contact Canada's two credit-reporting agencies: Equifax Canada at
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and TransUnion Canada at
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For a fee, these agencies will provide you with an online copy of your credit score as well as a credit report -- a detailed summary of your credit history, employment history and personal financial information on file. You can also obtain a free copy of your credit report by mail. If you find any errors in your report, notify the credit-reporting agency and the organization responsible for the inaccuracy immediately."
Explain how you can possibly come out ahead by paying up-front to reduce your mortgage rate when instead you can apply that same payment to increase your downpayment.
I've never heard of this, but then again it's been 14 years since I had to deal with getting a mortgage.
--------- Mortgage Points: What's The Point? By Lisa Smith on August 10, 2012
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The structure of home mortgages varies around the world. Paying for mortgage points is a common practice in the United States and, at least according to anecdotal evidence, it may be a uniquely American approach to home financing.
What Mortgage Points Are
Mortgage points come in two varieties: origination points and discount points. In both cases, each point is equal to 1% of the total amount mortgaged. For example, on a $100,000 home, one point is equal to $1,000. Origination points are used to compensate loan officers. Not all mortgage providers require the payment of origination points, and those that do are often willing to negotiate the fee. Origination points are not tax deductible.
Discount points are prepaid interest. The purchase of each point generally lowers the interest rate on your mortgage by 0.25%. Most lenders provide the opportunity to purchase anywhere from zero to three discount points. We will focus mainly on discount points and how they can decrease your overall mortgage payments. It is important to note, however, that when lenders advertise rates, they often show a rate that is based on the purchase of points.
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What a lot of mumbo-jumbo those "points" are.
I can tell you that it's not common here in Canada to have a mortgage where these points are an option.
As the blurb above implies, you're pre-paying a part of your interest, and as the rest of the article explains, whether it pays off in your favor depends on how long you live in the house.
----------- Consider the following example:
On a 0,000 mortgage with an interest rate of 6%, your monthly payment for principal and interest is 9.55 per month.
With the purchase of three discount points, your interest rate would be 5.25%, and your monthly payment would be 2.20 per month.
Purchasing the three discount points would cost you $3,000 in exchange for a savings of $47.35 per month. You will need to keep the house for
63 months to break even on the point purchase. Since a 30-year loan lasts 360 months, purchasing points is a wise move if you plan to live in your new home for a long time. If, on the other hand, you plan to stay only for a few years, you may wish to purchase fewer points, or none at all.
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Regarding mortgage terms:
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--------- For example, in Canada the longest term for which a mortgage rate can be fixed is typically no more than ten years, while mortgage maturities are commonly 25 years.
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Mortgage interest is not deductible in Canada, hence Canadian homeowners tend not to find long-amortization mortgages attractive. CMHC mortgage insurance does not insure mortgages with amortization terms longer than
25 years.
While mortgage interest is not deductible in personal income tax in Canada, any capital gains you make on the sale of your primary residence is tax-exempt. (and as a side note, any lottery winnings you have are also tax-exempt).
What's in your credit report is some sort of summary of how you've handled your debts, any that you've defaulted on, etc.
Your actual credit SCORE (that number between 300 and 900) is computed based on some sort of "secret" forumula, and you don't get that number as part of your "free" credit report.
Anyone (including you) that wants to know your credit SCORE has to pay $25 to get it.
Apparently, someone that always pays off their debts in full (ie - paying off entire monthly credit-card balance) can actually have a LOWER credit SCORE than someone who maintains a balance (but always pays at least the monthly minimum amount). The explanation is that someone who runs a credit-card balance (but always pays some of it every month) is more "valuable" to a lender vs someone who always pays their balance in full.
Been there, done that. It lowers the interest rate and the monthly payment for the duration of the loan. If you can afford and qualify for a payment of $2000 a month, but you can't qualify and afford a higher payment, then paying a couple points could mean you can get the mortgage and the lower payment, while without it you can't. I also explained to you that points are tax deductible, so if you pay $3000 in points it's really only costing you $1950. And after you recoup that amount, you're ahead in paying less interest for the rest of the loan.
If you don't want to pay points there are plenty of no points mortages available here. If you want a lower rate, you can get one with points. What's the problem with people having a choice? I never said that paying points are a good idea, for most people.
That's how it works. So, again, what's your problem?
No, because as previously explained, points are tax deductible. If you're in the 35% bracket, you'd be even in just 41 months and ahead after that, in the USA.
Since a 30-year loan
That's correct, that's how it works.
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OMG. If that were going on in the USA you'd say it was a time bomb and people are getting screwed. What happens if after 10 years rates are 3x what they are today? And given that they are extraordinarily low right now, that's a real possibility. What's wrong with you Canadians and your country? Here you can get a 20 or 30 year fixed rate mortgage.
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