The key question to ask is “What are the origination and discount points (or fees) for the rate my lender is offering?” In many cases a lender may give you discount points, but leave out important facts about your origination fees, or they might give only origination fees, but leave out the discount. It’s important to have both pieces of information, because essentially, when you add the origination fees and discount fees together, you get what it costs to obtain a certain rate.
To illustrate, say two different lenders are offering the same rate of 4.125% on a 30-year mortgage. The origination fees and discount fees with lender A are $4,500, whereas the origination fees and discount fees with lender B add up to $895. Lender B would be the right choice.
Indigo Mortgage believes that shopping around and learning about all of your options is necessary if you want to save money and find the best loan option for your circumstances. Working with a local broker like Indigo Mortgage can save you time and money in your search.