12 Jul

What most lenders don’t tell you is an option when shopping for a mortgage

Most people when shopping for a loan think whatever interest rate my loan officer quotes me must be the only option I have. However, sometimes your credit score is not the best at this given moment or rates are not as low as they use to be? So are you just stuck with the rates you are seeing?

Here is a tip on lowering your interest rate with your equity or cash on hand that most people are unaware of, Utilizing Mortgage points or “Discount points”. This is an upfront investment or fee/cost you can pay the lender to buy down your interest rate. You might ask, “Why would I want to pay the lender more money to lower my rate” and how is that an investment?

The Math: One point costs 1 percent of your mortgage amount (or $1,000 for every $100,000). Another way of looking at it is; you pay some interest up front in exchange for a lower interest rate over the life of your loan.

Discount points do not make sense for everyone, so it really depends on your scenario and how long you plan on staying in the home. You need to make sure you look at the numbers on how much it will cost vs how much you will be saving. Here is an example:

 

Loan amount: $200,000
NO POINTS 1 POINT 2 POINTS
Cost per point(s) 0 $2,000 $4,000
APR* 4.5% 4.25% 4%
Monthly payment** $1013.37 $983.88 $954.83
Monthly Payment savings N/A $29.49 $58.54
Break even N/A 68 months 68 months
Total Payment savings (30 year fixed loan) N/A $10,616.40 $21,074.40

 

*This is a sample APRs and points are for the illustration above and educational purposes only. This is not an actual rate quote, prequalification or commitment to lend. Actual rate buydown per point varies by loan program and market conditions.

**This is the cost of principal and interest only; taxes and insurance are not included in this example.

Apply now and I will work up these options based off your specific scenario and details to see if this makes sense for you: No obligation, Spam or sales tactics used.





 

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