Mortgages in a nut Shell – I have decided after reading my last two comments that most of the in depth finance stuff I have been writing about is really boring to 99% of the population. I would be kind of like Damon talking about legal code or Dad talking about different sutures. So I will try to make this a little more people friendly.
There are two key factors that you want to look at when you are trying to get a mortgage, the interest rate and the TOTAL fees. **Important Note** Always, Always gets a written good faith estimate when comparing loans. The reason that mortgage loan officers have a bad name is because little is known about what they really do and way too many of them lie to borrowers. As long as you know that you are comparing similar loan programs, 30 year fixed, 5 year arm, then you only have to look at the interest rate and the fees. If a lender wont give you written good faith estimate you don’t want to use them no matter what, they are hiding something important.
Interest Rate vs. APR – I would never use the APR any more to compare loans. It is an old government program that does not work any more because it is too easily manipulated to be whatever the loan officer wants it to be. The APR is not the interest rate you are paying on your loan. It was developed so that a borrower could compare the interest rate and fees at the same time. For example: is 6% and $3000 in fees better then 5.75% and $4000 in fees. It is hard to know without looking deeper into it. And instead of getting into the details of how to do that just call me and I will do it for you. ;)
As far as comparing fees, look at the total fees not just the origination or “points”. Again I could have higher points but lower closing costs because the other person just charges junk fees to make up for it. Also never look at the pre-paid items (taxes, insurance, days of interest) when comparing loans because they will be the same no matter where you go or what loan program you use. Lenders will often lower those so that it looks like your monthly payment will be lower then somewhere else then just blame it on the taxes when you sign your loan.
Subscribe to:
Post Comments (Atom)
2 comments:
One day, I hope to need mortgage advice... or my wife may kill me. :)
Yes that would be a good thing, Hey that "one call that's all" guy here is selling his house... i think it is going for $12 million but appraised for $20 Million. I guess you are not suposed to build a house based on a case that you haven't won yet opps he he he.
Post a Comment