Choosing a Low Rate Loan Versus Choosing the Best Loan
Most of today’s homeowners know that choosing a low rate loan is not the same as choosing the best loan, but not everyone knows how to spot the real deals from the phony deals.
Splitting the hair between the “good” and the “best” loans is a sophisticated subtlety. However, once explained, the lesson helps homeowners save THOUSANDS.
Here’s a way to quickly assess for yourself.
To choose the “best” loan, here are three main things to consider:
1. Is the rate reflected in the enticing advertisement based on buying your rate down or paying a lender’s fee?
Asking this question will help you set a baseline for comparisons.
Find out what a lender offers with Zero Costs and With Costs (No Points). These are truly the most common options.
2. Sort through loans with a high, low, or zero lender fee.
You can quickly identify the best loan by lender’s fees charged. Whether you write a check for the fees or the lender rolls the fees into your new loan amount (fees paid with equity), it is YOUR money or equity that is being used to pay for the fees.
Walk away from high fee lenders. Plenty of fish are in the lending sea who will treat you and your money right.
Advice: Low fees are the ticket. Rates with Higher Fees generally do not pay for themselves.
3. What is the future breakeven point?
When does the savings on your new monthly payment pay for the refinancing costs?
There is a calculation used to determine how long it will take to pay yourself back the costs associated with your new loan. The answer revealed by this analysis is often shocking to borrowers.
Choose on not having to recoup your costs over a long term. Your loan costs should be recovered in 2 to 3 years.
Remember; when all things that can be compared between two companies are equal, choices on rate become more evident.
There are lenders, like us at Interactive Mortgage, offering no fee and / or flat, minimal fees. For example, our maximum fee on a standard refinance is just $495.00. Compare that to other lenders who charge a percentage of the loan amount. Why give them $5,000, when you do not have to? $5,000 is a nice vacation you could take instead, right?
Our main goal at Interactive Mortgage is simple, but profound: help homeowners get the best qualifying, lowest interest rate that we can offer, and fund it as quickly as possible.
Call today to see how a low rate, low fee loan can benefit your long term goals.