Bag Person.

LAST UPDATED ON 2005-December-04!


Are we foolish? Stupid? Gullible? Crazy? Stay tuned to find out.



"What the dickens is all that stuff in the search string?" If you don't know you can find out by visiting our Google Search Tips page.


Why "1 Year Closed?" you may ask. With our previous mortgage we noticed that whenever the term recycled and we had the option of choosing a longer or shorter term, THE MORTGAGE RATES ALWAYS INCREASED WITH THE LENGTH OF THE TERM! At first that seemed a little strange because mortgage rates sometimes decrease too. What's happening here?

It only takes a moment's reflection to understand the system. Predicting mortgage rates is a big gamble. What if you predict wrong? You could lose thousands of dollars. Lending institutions are not going to take the gamble of giving you lower rates with longer terms because, if the rates actually raise, they'd lose money on lost interest! So, they "forward load" the system to reduce the probability of losing money on your mortgage. Like the roulette wheels in Las Vegas, the game is run so that the house almost always wins.

Choosing a one year term means that we more or less refinance the mortgage annually, but we've already done all the hard work to get it in the first place. Applying for the next term is trivial, and choosing a one year term almost always nets us the best rate.

Why not choose the six month term instead? The rates are higher, probably because of the added work involved for the lending institution.


For at least two decades Canadians have enjoyed the ability to have regularly recurring payments (e.g, telephone bills, utility bills, cable TV bills, mortgages) electronically deducted directly from their bank accounts. Gone are the days of having to remember to send a cheque, find an envelope and a stamp, then find a mail box, then hope that Canada Post gets the letter there in time. The better news is that if there are any fees for this service, they are usually not passed on to us, being absorbed somewhere up the line. From our perspective, the service is free. (But, don't kid yourself. You still need to make sure there's money in the account to cover the debits!)


Contrary to popular opinion, Marguerite and Stan are not filthy, stinking rich. (We wish!) In fact, retirement is going to be a bit sparse with Stan probably working part time or temporary positions from time to time to make ends meet. We'd decided what we could spend on a motorhome, discounted it a bit to leave room for the repairs and alterations that are always necessary, and that's what we generally entered in our search criteria (taking exchange rates into account) when using Google on the Internet. It turns out that this motorhome was going to cost us a bundle more than we thought we could afford. Watch carefully, you might find Stan walking the roadsides, picking up beer cans! Honk and wave as you speed by.

One of the first options that we considered was financing the motorhome with a simple bank loan. A few calls to some of the local banks revealed that the current interest rates for motorhome loans centred around 6% or 6.5%. In this day and age, that seemed a bit high.

So, we sat down and did another reality check to estimate our projected net worth at the moment Stan retires. (This was only the umpteenth time we'd done so in the past several years.) This helped us identify what other of our meagre assets we could tap for this undertaking. Among those assets was our home, whose mortgage we'd paid off several years ago. The Schultz homestead was about to take a hit!

So, from all appearances our most accessible source of funds in the order of magnitude that was required was going to be a mortgage of our home. This was no easy decision. We'd prided ourselves on paying that mortgage off and viewed another mortgage with great trepidation. If we defaulted (for some unknown and completely unpredictable reason) we'd lose our home. Still, if we wanted any motorhome, that's about the only way we could get the money, so Stan began looking for lending institutions.

Stan cranked up the old computer, called our old friend Google, used the search string

and received a number of hits. Among them was a link for the Calgary Real Estate News (CREN) list of mortgage rates. It's published weekly by the Calgary Real Estate Board. But of course! Who would be most interested in us finding the best mortgage rates available? Obviously, someone who had a vested interest in expediting a real estate sale and the associated mortgage.

After fiddling with their list a bit we learned how to sort it by clicking the column that we wanted it sorted by, "1 Year, Closed" specifically. That's when we noticed the spread in interest rates. Some were as high as 4.75%, others as low as 3.55%. That's almost 1½%. Now you might say "What the heck, it's only a percent and a half." But when we deal with amounts in the $100,000 to $200,000 range over a period of 20 years, it adds up. For us it amounts to almost $2,000 a year. That's a lot of greasy cheeseburgers!

So, who are these people who can give us such good rates? A few calls revealed that they were mortgage brokers.


Of the several that we called (those advertising the lowest rates), we got 100% voice mail responses. "If you know who you want to speak to, press..." We didn't so we just left "Call us back at your earliest convenience" messages. The first one to return our call was Sue Black-Garland of the INVIS Financial Group so Sue got our business.

While our method for picking a broker was a bit unscientific, it worked. We can recommend Sue very highly to anyone in southern Alberta.

But, what IS a "mortgage broker?" Basically these are just a person or a company who helps us get a mortgage. They canvas the various lenders for the best deal. The various lenders are also competing with each other for the broker's business, encouraging even better deals. The broker supplies us with a list of the documents and information required by the lending institutions. We merely collect and transmit these things to them. The broker fills out and submits the application forms for us.

The best news of all is that a good mortgage broker won't charge us one thin dime! They're paid a commission for their work by the lending institution.

Now here comes the bad news: We have to pay all the extra expenses associated with the mortgage. We'll get to those a little farther on.


All of our submissions were FAXed to Sue. She didn't need the originals and we didn't even have to go to her office. In fact, we don't even know what she looks like!

The documents we had to submit to Sue fell into two more or less distinct categories.

We'll discuss each in its turn.


We had to submit a bevy of documents to prove that we were capable of sustaining a mortgage. These documents were collected by Sue before any applications were made. She compiled the information on them and, presumably, submitted the resulting application to several lenders to see which one would be willing to accept us. Here is a list of the documents she needed.


We had to submit the following to demonstrate that the real estate was really mortgagable for the amount we wanted.


And that saying isn't any truer than in the mortgage market. Because the lending institutions are giving us bargain basement rates they expect us to pay the fringe expenses. In our case these were

and we discuss each in its turn.


At least this was maintaining our interest.


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This page was initially created on 2003-November-09.
The last revision occurred on 2005-December-04.