It’s early October in New Mexico, and we’re seeing more than hot air balloons rising. We are seeing mortgage rates rise from the historical low rates of the last year. Unfortunately, we are also seeing many online lenders still offering those low rates from several weeks ago. These mortgage lenders are not being truthful in their advertising about what it’s costing to now get that low interest rate. They must believe that borrowers will get caught up in “getting the lowest rate possible” and not investigate how much that advertised rate will cost them.
At Indigo Mortgage, we encourage borrowers to consider an important idea when looking for a new mortgage, whether it’s a new home purchase or a refinance. We are all for getting the best rate on a home loan but what are you willing to pay to buy down that rate?
The most effective question to ask your potential mortgage lender is, what is it costing me to get the rate you are offering? More specifically, ask what origination and discount fees will be charged. Make sure to ask for both origination and discount fees! If that lender’s response is not forthcoming, consider that a red flag.
Once the lender discloses those 2 fees, origination and discount, then you can easily compare offers. Any fees outside of origination and discount fees are going to be exactly the same for all lenders as those will be title and escrow account charges. Sometimes the lowest rate is not the best option, if its costing thousands of dollars just to buy it down to get that low interest rate.
Make sure to shop your mortgage around and always ask the question of what is it costing me to buy down that rate. Shop your loan and be sure to include your trusted local mortgage company Indigo Mortgage, serving New Mexico homebuyers since 2003.