Borrowers Need To Beware Of Costs Associated With Interest Rates

Borrowers Need To Beware Of Costs Associated With Interest Rates. Sunday I posted a blog titled "Why Is The Annual Percentage Rate (APR) Higher Than The Interest Rate" on what fees makes up the APR and why the APR is higher than the Interest Rate.  Nina Hollander re-blogged my blog and made the following statement at the end of her comment which got me to think I should expand upon it in a follow-up blog.

"So don't just go out and pick a lender based on the quoted rate."

As low as Interest Rates have been and continue to be, there are Lenders who still try to conceal Points associated with the Interest Rate they are quoting in order to quote an even lower Interest Rate.  Even with the strict advertising rules Lenders have to abide by today, Lenders, especially Internet Lenders, continue to find ways to not reveal the true cost associated with their Interest Rate.

Interest Rate shoppers need to be very careful not to fall into the trap of just looking at who has the lowest Interest Rate.  Some times the lowest Interest Rate is not the cheapest rate.  When shopping to see who has the best deal, Borrowers need to also look at the Lender's costs associated with the Loan.  The quickest way to do this is to ask each Lender for what their cost is in box "A" of the Good Faith Estimate (GFE), and to also ask for what the APR is on the Truth-In-Lending (TIL) Statement.  Most Lenders will not give a GFE prior to doing a loan, but there is no reason why they can't verbally state what their fee is in box "A" of the GFE.  If they will not do that, then Borrower Beware.

Another document Borrowers can ask for when shopping for who has the best deal, is to ask for a "Fee Worksheet" .  A Fee Worksheet is what the old GFE use to be, and actually breaks down the Closing Costs better then the GFE does.  If a Lender will not provide a Fee Worksheet then once again Borrower Beware.

However, Interest Rates and Closing Costs should not be the only reasons in choosing a Lender.  Borrowers need to look at the Service, Availability, and Knowledge of the Loan Officer they are considering working with.  Shopping for a mortgage goes beyond the Interest Rates, when shopping for a mortgage Borrowers Need To Beware Of Costs Associated With Interest Rates as well.

 

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 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com