market interest rates.
Points: Start by asking your lender what the "par rate" is for the loan that you are considering. "Par" means that you are not paying any "points" to reduce the rate nor are you receiving a credit (cash to you) which would increase the rate. Each point typically costs 1% (100 basis points) of the loan amount and can lower your interest rate by a certain percentage. If you choose to raise the rate the lender will give you a cash credit that may be applied towards paying the closing costs. To get the most competitive interest rate, it's essential to maintain a strong credit profile, shop around, and carefully consider your loan options. Additionally, working with a mortgage originating professional can help you navigate the lending landscape and find the best loan instrument for your specific needs.
TYPES OF MORTGAGE INSTRUMENTS
Residential loans are either “Fixed-Rate” mortgages or “Adjustable-Rate” mortgages. In a Fixed-Rate Mortgage (FRM), the interest rate is set for the entire term of the loan. A Fixed-Rate Mortgage offers consistency to borrowers because they’ll know exactly how much each monthly payment will be from the first day to the last day and how much principal and interest they will pay in total. Ask your mortgage originator for an amortization chart of your loan. The chart shows how much of your payment is assigned month by month to the interest the lender is charging and how much goes to principal which creates equity for you. The amount that goes towards paying interest is larger than the amount going towards principal at the beginning of the term. The amount going towards interest will diminish each month while the amount going towards your equity will increase.
26
Powered by FlippingBook