Since mortgage rates are still at or near historically low rates, New Mexico’s homeowners always look for the lowest rate they can find on a new mortgage or a refinance. We caution to be careful that you don’t make the low rate your idol. Exactly, what does that mean?
It means that you can make a big mistake by focusing on a low mortgage rate and not taking into consideration what that low rate will cost you, or if it even helps your situation.
Let’s say a borrower is focused on a low rate below 3%. Some mortgage lenders will provide that rate, but it might have huge fees to buy it down to that level. Some lenders don’t make it clear to the borrower what that cost is, and it could add many thousands of dollars to the note.
For example, if the cost to buy down the rate is thousands of dollars, then typically the loan amount goes up to cover the higher fees. That combination of high closing costs and a larger loan amount can negate the benefit of that low rate.
We encourage borrowers to be very cautious of the big lenders, especially the online company whose names rhymes with “pocket”… we continue to see them offer low interest rates but with very high fees to borrowers. As always, shop your mortgage to several companies to compare not just the interest rate, but the fees, and be sure to shop local, by including a local mortgage broker like Indigo Mortgage.