MORTGAGE & REAL ESTATE MARKETS

Mortgage Savings: Mortgage Down Payment v.s. Mortgage Rate Points

Like any other major financial decision, homebuyers are often looking for ways to make the most cost-efficient deal; when it comes to owning a home, that often boils down to getting the lowest mortgage rate possible. While having an excellent credit score is ideal for setting the tone for that low mortgage rate, it’s really one of two things that can dictate what the final mortgage payments will be: the mortgage down payment the buyer makes or the mortgage rate points the buyer purchases.

Most homebuyers know that a down payment is expected with any home purchase. Therefore, let’s start with a look at how making varying down payments can affect a mortgage rate. Say a nice young couple, the Smiths is what we’ll call them, wants to buy a $150,000 home. They’re currently being offered a 30-year fixed mortgage with a 6.5% fixed mortgage rate and are fortunate to have some leeway in the cash they can access for a down payment. They are trying to determine how much benefit they’ll gain by making down payments. Here’s what they found:

read more..

Mortgages: What Kind of Mortgage Rate You Should Expect

There are wonderfully tempting mortgage rates advertised daily on TV, over the Internet, in the newspaper and through the radio. But guess what? What you see and / or hear will not necessarily be what you get. Why not? Well, as with most things in life, mortgage rate offers always come with a catch. The catch in the case of mortgage rates: your credit rating.

Generally, when mortgage rates are quoted, the mortgage rates are based on the potential lendee (ie. you) having what is deemed as excellent credit. In today’s economy, the low end of that spectrum is a 700 credit score with the preferable rating being 720+. I know what you’re thinking: That’s a steep qualification in order to obtain the advertised mortgage rate. And you know what? You’re right.

There is, of course, a segment of the Canadian population who will have no problem qualifying for advertised mortgage rates because they do have that coveted 700+ credit score.

read more..

Make It A Point To Discuss Mortgage Rate Points

When you sit down with a mortgage loan officer to talk about mortgage loan rates, be ready to ask questions. Ask anything that comes to mind but before you leave, ask about mortgage rate points. If you don’t, it could cost you significantly in the long run.

The two main types of points to discuss with a mortgage loan officer are origination mortgage points and discount mortgage rate points. Here’s how they differ: An origination mortgage point is a fee that some mortgage firms apply to any loan that they help broker. Meanwhile, discount mortgage points allow you to decrease the overall interest you’ll pay on a loan obtained through a mortgage firm; with discount points, you are actually paying to decrease the interest rate of the loan you qualify for.

read more..