Sep
25

Don’t Let FOMO Affect Your Decision Making

Lately a lot of my clients of had a difficult time deciding between fixed and variable when choosing their mortgage option. I certainly can sympathize with the decision that is not easy one to make. It seems that it all comes down to fear of missing out a relatively new phenomenon that we are experiencing in the world at large. FOMO has become a term popularized by the fear of missing out on interesting events, especially aroused by usage of social media. In my example here, social media does not have anything to do with the choice of fixed vs variable. Rather, FOMO here revolves around getting the best deal and making the best decision.

For example, if someone takes a variable rate today, there are always worries that the rates might go up by too much, too fast. If someone takes a fixed rate, have they really captured the bottom-end of this market?. My opinion this is the totally wrong way of looking at things. You’re not missing out at all, you’re getting the best rates we’ve ever seen in our lives and we may never see them again. Whether you go fixed or variable, neither of these are wrong. The Bank of Canada has made it much more difficult to qualify for variable rate, because it is inherent that the rate that may rise. It wants to make sure that you are able to afford when rates go up and inevitably rates will go up it is only a matter of how fast and when.  I say, don’t let FOMO rule your decision making.  Speak to a financial planner like Shannon Lee Simmons and figure out your budget before you make that choice to buy something.  She can set you straight with what you can afford today AND what to do if/when rates change.  Remember too that rates are usually held for five year terms therefore you will need to renew about 5 times unless you’re paying down you mortgage very fast.  The bottom line is, ensure you are taking advantage of the rates we see today by paying down your principal as much as possible, or AMAP (oh look! another acronym). Lenders these days make it very easy to do this, ask me how based on your lender you are with.

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