Mortgage Payment vs Mortgage Interest Rate

 

 

Mortgage Interest Rates - When people shop for mortgages, one of the first things they want is to know the interest rate. Not only that, they want the best and lowest rate. When your average loan officer hears this, they usually don't want to lose you as a client, so they might low ball the rate a little.  It doesn't matter if they put this quote on the good faith estimate. It's just an estimate on a piece of paper that until you have a property and have locked into this rate, some loan officers won't honor this estimate. And in order to secure this rate, you should have been given an interest rate lock-in agreement.

Overall, what you think might be the best, might not be the best. Shopping and comparing is not always easy and needs to be done on the same day. What I want to talk about is your mortgage payment and what you should be thinking about.

 

 

 

It can be a balancing act when you are trying to get the lowest interest rate when your main focus should be what type of mortgage payment that you would be comfortable with. One of the first questions that I ask is what kind of mortgage payment you would be comfortable with, or at least a range. I have been criticized by a few loan officers in the past for mentioning this and they had their own reasons. But believe it or not, about 95% of the buyers that I speak to, already have a quick idea. This shows that they have been pro-active in their thinking and not trying to buy the most house that they can afford.

A quick lesson in mortgage interest rates.  Sure, the lower the rate, the lower your mortgage payment. But should it really matter if you tell me that you are comfortable with a $2,500 mortgage payment and I tell you that your interest rate is 15%? Sure, it would mean that you could only buy x,y,z house. But your main focus was on the payment that you are comfortable with. 

 

 

 

In my opinion, interest rates can play a mind game in several ways.

Many people in our industry have been told to rate. Too many people get hung up on trying to get the lower rate. Sometimes in your mind, a lower rate means that you can afford that payment. When in reality, you should start with what payment you can afford.

Another issue is that some consumers try to out do their neighbors and friends. It becomes bragging rights, in regards to who got the best deal. Unless you both pull out your credit reports, you HUD-1 settlement sheet (to see how much you paid), and bought the exact same house; this still won't tell you who got the best deal. 

Lastly, each consumer is different. There is not one person out there that will ever have the exact same scenario as the next. And 2 months down the road, who can say that the rates would be the same or that they are the same.

 

 

ADVICE : Trust the professional that you decide to go with. Always ask questions and if you don't understand something, don't hesitate to ask. "No question is a bad question." 

 

 

 

                    

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Copyright © 2009 by Jeff Belonger of Infinity Home Mortgage Company, Inc