Best Rate or Lowest Costs? You decide

A common mistake shoppers make is to ask: "What's your best rate?" or "What are your closing costs?" Both logical questions to ask, but they do not give the response most borrowers need to make a proper decision. Borrowers must understand both rates and fees. Rates are only half the answer to getting the best deal. It is possible end up with the lowest rate but not necessarily the best deal.

Simply put, the lowest rate & the lowest fees do not go hand-in-hand. NO LENDER can offer both together. I can give you rock bottom rates, but it will cost you in fees. I can give you the lowest fees, but it will cost you in interest rate. Most lenders quote their best rate in combination with covering all third party fees (appraisal, credit report, title company, state taxes, county recording fees, etc) with 1% origination. See the example below.

	Lower Rate	Normal Quote	Lower Cost	NO Cost
Rate	6.5%	6.75%	7.00%	7.75%
Origination	1%	1%	None	None
Points	1%	None	None	None
Total Closing Costs	$5347	$4130	$2346	None
Monthly P & I Payment	$948.10	$972.90	$997.95	$1,074.62
10 Years of Interest	$93,963	$96,227	$98,502	$109,853
20 Years of Interest	$164,069	$169,752	$175,489	$197,451
30 Years of Interest	$194,345	$201,768	$209,295	$236,861

WHICH LOAN WOULD YOU LIKE?
I can offer you all four options on all of our loans.

As your Mortgage Consultant, We will show you your different options. You tell us what you really want, and then we will advise you on what we think is best based on your needs and financial goals. We are proud to provide solutions to each of our customers, no matter what their financing needs!

The combination of rate & fees can be very confusing. One lender is screaming "No closing costs." A second lender may quote you 7.00% with $2246 in fees, while another lender is offering 6.75%% with $4130 in fees. So are closing costs and fees bad? Well if you ask everyone's brother, mother, or sister who has a real estate license and knows everything about mortages, then the answer you will most likely hear is yes. I am here to tell you everyone's brother, mother and sister are probably wrong.

Begin by asking yourself "How long an I going to be in this property?" This is the single most important question to determine which option is best for you. Now look at the chart above. It becomes very obvious based on how long you are going to be in the home if 'Best Rate or Lowest Cost' makes the most sense for you and your family.

Congratulations, you are now smarter than everyone's brother, mother and sister with a real estate license.