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The Tampa Bay Areas' Favorite Source for Real Estate and Financing Needs |
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Know the Numbers THE INTEREST RATE THE LENDER OFFERS Y0U FOR YOUR HOME LOAN IS IMPORTANT. THE APR (Annual Percent Rate) IS MORE IMPORTANT . If two people get a new home loan and party "A" is at 6% interest with an APR of 6.5% and party "B" gets a loan for 6.25% interest with an APR of 6.3%, guess who has the best loan. Party "B" with the higher interest rate. His overall costs will be less for this loan. Lenders have an array of fees (some, a lot more than others). These fees, when added to your mortgage interest rate, will determine your APR. The fees consist of, but are not limited to: Origination fee, Discount Points and mortgage insurance to name just a few. Always ask your lender at the beginning what ALL their fees are. ORIGINATION FEE: A fee charged by a lender for the processing of a loan application, expressed as a percentage of the mortgage amount. POINTS: A "point" is equal to one percent (1%) of the total loan amount. The lender you are interviewing may say "we only charge a one point" origination fee. Did he say they also are charging a "discount" rate or "point" to make the interest rate lower? Ask for a statement of estimated fees for your specific loan. Compare these fees (and the APR) to other lenders. ADJUSTABLE RATE MORTGAGES (ARMs): These can be great loans if you aren't planning on holding the property for a long period (say five years or more). They start at a lower rate than fixed rate mortgages; however they go up periodically (usually every 6-12 months). Be careful. Find out when the first increase is; how often the loan's interest rate can increase, and how much it can increase on the anniversary date. INDEXES: ARMs are adjusted up (and on rare occasions down) according to an "Index" your loan is tied to. Lenders like to index to Treasury Bills and Federal Funds Rates. Try to avoid these. They're too volatile. The "11 th District Cost of Funds" is better. It's more stable. If not that then try LIBOR (London Inter-Bank Offer Rate). This is a conservative index too. Call 813-265-2494 or Toll Free 1-877-478-5794 Superior Service to one Satisfied Customer at a Time!
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