TOP 5 COSTLY FINANCIAL MISTAKES HOMEOWNERS MAKE WITH THEIR MORTGAGE
- johnathanmcquoid
- Jan 17
- 2 min read
Most people focus on rate… but the biggest financial losses actually come from bad decisions made after the mortgage is in place.
Here are the top 5 mistakes that quietly cost homeowners thousands 👇
❌ 1. Not consolidating high-interest debt into a low-interest mortgage
Many homeowners avoid using home equity because:
• “I don’t want to use the equity in my home.”
• “I can pay it off myself.”
But real life happens:
✔️ car loans
✔️ credit cards
✔️ unexpected repairs
✔️ income changes
Minimum payments on high-interest debt can trap families for years, while a strategic refinance can drastically reduce monthly payments and improve cash flow.
❌ 2. Paying fees just to get the “lower” rate
Rate chasers — beware.
Sometimes the lower rate with a fee ends up costing more than the slightly higher rate with no fee.
Example:
Mortgage: $500,000
Option A: 4.49% + $2,500 fee
Option B: 4.64% no fee
After 2 years:
• You owe $1,929 MORE with the “low rate” option
• You saved only $672 in payment
You paid a $2,500 fee to lose money.
❌ 3. Not looking at long-term planning
Most homeowners refinance every 3 years, even when they take a 5-year term.
If that’s the case, why lock into a long term that costs more and has higher penalties?
A shorter term (2–4 years) can mean:
✔️ lower rate
✔️ easier planning
✔️ cheaper exit options
✔️ better equity strategy
❌ 4. Choosing a 5-year term when a 3–4 year term is cheaper
Banks don’t push 5-year terms because they’re “safer”… they push them because they are more profitable.
Example on a $450,000 mortgage:
2.34% (3-year)
→ $990 bi-weekly
→ $402,578 owing after 3 years
2.59% (5-year)
→ $1,018 bi-weekly
→ $403,604 owing after 3 years
You paid:
🔸 $2,184 more in payments
🔸 $1,026 more owing
🔸 Total loss = $3,210
All because of choosing the wrong term.
❌ 5. Getting a mortgage with a lender that charges massive penalties
This is where homeowners lose the most money.
Big banks often use “IRD penalties” that can exceed $10,000–$20,000 if you break early.
Example:
Mortgage = $403,750
Break at year 3
• Big bank penalty: $12,672
• Monoline lender penalty: typically $3,000–$4,000
That’s a $10,000 difference — just in penalties.
💬 Final Thought
Small decisions can have huge financial consequences.
Before choosing your term, rate, lender, or strategy — talk to a mortgage professional who can show you the real numbers, not just the rate.
If you want help reviewing your mortgage or avoiding expensive mistakes, message The Frontline Mortgage Group anytime. 💬