Choosing the best mortgage from all the available lenders out there can be complicated. There are so many terms, features, restrictions and potential penalties to keep in mind. But at least mortgage rates are easy to compare—all you have to do is choose the lowest one, right?
Think again! Choosing the lowest rate is only straightforward if all the rates are stated the same way and include the same things. Fortunately, lenders are required to use the Annual Percentage Rate (APR) as their posted rate. So on lender websites, ads and window posters, the rate that’s quoted should be APR.
The Annual Percentage Rate is a compound rate, so it’s applied to original principal plus accumulated interest. This gives you a more accurate picture of the actual cost of the loan. To make the APR even more realistic, it not only includes all the interest costs of your loan, it also includes non-interest costs that lenders charge. Depending on the lender, this can include appraisal fees, closing costs, loan fees, loan origination fees, mortgage default insurance, creditor life insurance, legal fees and more. It’s that “depending on the lender” part you have to watch. The only way to accurately compare APRs is to look into each lender’s fine print and see what’s included in the rate it’s quoting.
Or, you could take the easier, faster, less frustrating route, and simply call me! As a Licensed NYS MLO, I have access to more lenders than you could possibly find on your own, and I fully understand all their products, terms and rates. I don’t usually advertise myself on blog posts, but I’d be happy to do a no-charge analysis of your needs, and then discuss which options work best for you. And I’ll make sure you don’t get fooled by a really low mortgage rate that could actually cost you more in the long run because of all the restrictions and penalties it includes.
Lester Bleich, New York State Licensed Mortgage Loan Originator 