Business decisions drive mortgage rates

The actual money source from mortgages is pretty small.  It’s like a spring coming out of the side of the mountain.  In strong precipitation years, the spring flows freely and in low precipitation years, it flows more slowly.  Pretty much everyone goes there to get water.  Some years there are lots of people going to get water and in other years, few people are going to get water.  In comparison to the years 2002-06, we’re in a mortgage money draught. There’s not a lot of water.  There are also very few people going to get water.  But the water is pretty much the same.

Now, what each institution does with the water is different.  Some give it away for free. Some of them charge a reasonable fee.  Some overcharge for it.  That’s the difference in interest rates.  I often tell clients that we provide a competitive rate for our mortgages.  I never say we’re the “best rate” because some days we are and some days we aren’t and it’s impossible for me to know what’s so from day to day or even moment to moment.  Yet, I know that if we price ourselves in the market and remain competitive, and I know that my clients are well-served, if for no other reason than I need to sleep at night with a clean conscience.

Stop getting an income tax refund

I’m a big believer that you pay as you go, that you get good tax advice throughout the year (at least quarterly) from a tax preparer who is also a tax planner.  So long as you make your payments on time, there’s no penalty to pay and you’ve had use of your money in the meantime.  You want access to your money when you need it and not have to wait until tax season to get it back from the IRS.  I’m often amazed at how many people plan to receive a refund and have it allocated to a specific expense, like property taxes.  Yikes.  What if your taxes go up and that regular refund disappears?

Get a good accountant.  Know your tax obligation.  Pay it.  Don’t overpay.  And budget for all your expenses.