Mortgage Shopping Tips

When shopping for a mortgage loan, will each lender has different rates, fees, and points for each program, loans. When shopping for a mortgage loan, it is important to understand the three components of a rate and fee quote: (1) Premium rates (2) the lender fees, and (3) discount Points.

Mortgage refinancing tips

A premium rate offers are any interest rate above the market rate (hereinafter referred to as "the Couple rate"). While the Couple rate change constantly during the day, most lenders to commit to a specific pair of rate early in the day. If the Couple is 6.00%, the lender only earn revenue if they offer you a rate above Par (for example, 6.25%).

Lender fees for services which are carried out directly by the lender, which may include processing fees, underwriting fees, origination fees, etc. These fees are charged to offset the cost of processing, closing and funding mortgage loan.

Discount points represent often the largest fees associated with your mortgage loan as one point equals 1% of your loan amount. If you apply for a $ 350,000 loan amount and pay 2 discount Points, would charge point discount stand $ 7000. Borrowers can use discount Points to obtain interest rates below Par rate. If the Couple is 6.00%, would be subject to a rate of 5.75% for example specify that the borrower will have to pay discount points.

Factors to consider
Each lender offers several combinations of rates, fees, and points across a range of different applications. All these choices can be overwhelming when you are trying to decide between different programs, rates and fee packages. In order to limit the possibilities, it is often useful to answer a few key issues:
How long do you expect this loan? Consider the probability of moving, moving or refinancing when determining your time frame. Think in 5-10 years. Do you have the available cash to pay additional fees to lower interest expenses expenses later? Be sure to pay upfront fees is the best use of your money. For example, can pay higher fees or points for a lower rate not be a good use of cash at the same time transporting high credit card balances.

If you expect to have the mortgage for a long time, do pay points to lower the rate economic sense, because you will enjoy the lower rate for a long time. If your time horizon is short, avoid points and pay the higher rate, because you do not pay it for a long time.

If you plan to have your loan for 5 years, will pay 1 discount point on a $ 350,000 loan cost you $ 3500 advance at the same time saves $ 88 a month. After 40 months of savings, you have recovered your immediate costs and will take advantage of the lower rate. If you stay in the loan in 10 years, you will have created an additional $ 7,060 interest savings over the life of your loan. Like interest points are 100% tax deductible in the year you pay them.

The second factor is your opportunity costs. What can you do with money, if you did not use it to pay points? Even if you expect to be in the House for a long time, there could be other uses for your money, take precedence over the long term savings from a lower interest rate. A useful way to combine these factors is to look at payment of points as an investment that yields a return, increase the longer you stay in your House.

Check Greenwood capital For specific analysis of available interest rates, discount points and fee packages, you can visit our Web site at GreenwoodLoans.com. Or Select "rates" on the top navigation bar to view our current interest rates, which is updated daily. Request a custom rate and fee quote have mortgage loan consultant give a lock-able interest rate associated with the lender fees and closing costs for your review via email.