How do you "buy" a better rate?

Do you plan on keeping your loan for a while? Then it may make sense to "buy" a lower interest rate by paying "points".  Please Be Aware that most mortgage companies and banks will Automatically charge You a Point, then Put it in Their Pocket, and Not Even Use it to Reduce Your Interest Rate.  However, the Points I Quote You will be used to Reduce Your Interest Rate.

A point -- which equals one percent (1%) of the total loan amount -- is an up-front fee that lowers your annual interest rate and total interest due over the life of your loan. You can lock-in a base interest rate with 0 points, or you can lower your Interest Rate by paying, for example; a quarter of a point, half a point, one point, two points, etc., until you settle on the interest rate you'd like. 

Here's how you can tell if buying a lower interest rate makes sense...If by paying one point it lowers your monthly payment by $50.00, and the point percentage costs you $2,000.00 dollars added to your up-front closing costs, then you would just divide $2,000.00 by $50.00 and You'll See that You'll Break Even in a little over 3 years. If you're going to keep the home more than 3 years, then it makes sense to buy a lower interest rate that you'll have for the Life of the Loan...or as long as your rate is Fixed.

If You're Refinancing, the points are built-in to the new loan balance and there's no 'out of pocket'. If You're Purchasing, maybe you can negotiated that the Sellers will credit you up to 3% or so. There are a variety of rate and point combinations available that can make a loan's terms more favorable...if that's what's right for you.

When you look at different loan programs, don't look just at the rate -- compare the whole package. Federal law requires lenders to publish their loans' Annual Percentage Rate, or A.P.R. The A.P.R. is a tool used to compare different terms, offered rates, and points.

Call & Let's Get Started,