How do you figure out if a mortgage interest rate is reasonable?

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I'm about to make an offer on a home and just spoke with a mortgage broker. The loan is going to be fairly standard for my area but "high-balance". She told me the best rate she can get is 4.75% which seems reasonable, but then I searched on line and it and it looked like rates were at 4.50% (or even lower in some cases) but that is a search, how can I get a reasonable understanding that her rate is good or bad? is the only way to go to multiple brokers? I don't really need multiple pulls from brokers on my credit.







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  • 1




    Do you have a local bank/credit union that offers mortgages?
    – mhoran_psprep
    Aug 22 at 13:17






  • 3




    I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
    – Kora
    Aug 22 at 14:13






  • 5




    If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
    – MonkeyZeus
    Aug 22 at 17:30











  • Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
    – JPhi1618
    Aug 22 at 18:11
















up vote
14
down vote

favorite












I'm about to make an offer on a home and just spoke with a mortgage broker. The loan is going to be fairly standard for my area but "high-balance". She told me the best rate she can get is 4.75% which seems reasonable, but then I searched on line and it and it looked like rates were at 4.50% (or even lower in some cases) but that is a search, how can I get a reasonable understanding that her rate is good or bad? is the only way to go to multiple brokers? I don't really need multiple pulls from brokers on my credit.







share|improve this question


















  • 1




    Do you have a local bank/credit union that offers mortgages?
    – mhoran_psprep
    Aug 22 at 13:17






  • 3




    I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
    – Kora
    Aug 22 at 14:13






  • 5




    If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
    – MonkeyZeus
    Aug 22 at 17:30











  • Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
    – JPhi1618
    Aug 22 at 18:11












up vote
14
down vote

favorite









up vote
14
down vote

favorite











I'm about to make an offer on a home and just spoke with a mortgage broker. The loan is going to be fairly standard for my area but "high-balance". She told me the best rate she can get is 4.75% which seems reasonable, but then I searched on line and it and it looked like rates were at 4.50% (or even lower in some cases) but that is a search, how can I get a reasonable understanding that her rate is good or bad? is the only way to go to multiple brokers? I don't really need multiple pulls from brokers on my credit.







share|improve this question














I'm about to make an offer on a home and just spoke with a mortgage broker. The loan is going to be fairly standard for my area but "high-balance". She told me the best rate she can get is 4.75% which seems reasonable, but then I searched on line and it and it looked like rates were at 4.50% (or even lower in some cases) but that is a search, how can I get a reasonable understanding that her rate is good or bad? is the only way to go to multiple brokers? I don't really need multiple pulls from brokers on my credit.









share|improve this question













share|improve this question




share|improve this question








edited Aug 22 at 19:18









JoeTaxpayer♦

141k21222454




141k21222454










asked Aug 22 at 13:14









Sam

251211




251211







  • 1




    Do you have a local bank/credit union that offers mortgages?
    – mhoran_psprep
    Aug 22 at 13:17






  • 3




    I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
    – Kora
    Aug 22 at 14:13






  • 5




    If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
    – MonkeyZeus
    Aug 22 at 17:30











  • Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
    – JPhi1618
    Aug 22 at 18:11












  • 1




    Do you have a local bank/credit union that offers mortgages?
    – mhoran_psprep
    Aug 22 at 13:17






  • 3




    I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
    – Kora
    Aug 22 at 14:13






  • 5




    If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
    – MonkeyZeus
    Aug 22 at 17:30











  • Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
    – JPhi1618
    Aug 22 at 18:11







1




1




Do you have a local bank/credit union that offers mortgages?
– mhoran_psprep
Aug 22 at 13:17




Do you have a local bank/credit union that offers mortgages?
– mhoran_psprep
Aug 22 at 13:17




3




3




I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
– Kora
Aug 22 at 14:13




I believe that if you have multiple pulls for mortgage shopping, if they are within 2 weeks of each other, they count them as 1 pull, and the ding to your credit is negligible. Plus hard inquiries will only stay on your report for 2 years, afterwards. If you don't have any plans for additional borrowing over the next two years, then you really shouldn't be worried about a few extra pulls.
– Kora
Aug 22 at 14:13




5




5




If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
– MonkeyZeus
Aug 22 at 17:30





If you're looking for an opinion then 4.75% seems within the "margin of error" in regards to a good rate especially given that we don't know what "high-balance" means, we don't know your credit score, and we don't know what bank offered this to you. The only way to know is to get competing offers and pick the one you like.
– MonkeyZeus
Aug 22 at 17:30













Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
– JPhi1618
Aug 22 at 18:11




Probably goes without saying, but for future reference, interest rate is only one consideration when choosing a lender. Understand closing costs, and very important - closing speed.
– JPhi1618
Aug 22 at 18:11










4 Answers
4






active

oldest

votes

















up vote
32
down vote



accepted










To quote the poet Robinson... You better shop around.



Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.



However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).



If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.






share|improve this answer




















  • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
    – Johnny
    Aug 22 at 22:37










  • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
    – GOATNine
    Aug 24 at 16:26


















up vote
2
down vote













The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.



As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.



The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.



You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.






share|improve this answer



























    up vote
    0
    down vote













    Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.






    share|improve this answer




















    • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
      – Glen Yates
      Aug 24 at 19:19










    • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
      – CrossRoads
      Aug 24 at 21:14


















    up vote
    0
    down vote













    I had to answer because nobody called out the obvious.



    Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.



    Things to understand about what impacts your interest rate:



    - LTV = Loan to value. The higher the LTV the higher the hit to the rate.
    - Credit Score = lower the credit score the higher the hit to the rate
    - Mortgage product - Conventional, FHA, VA
    - Term
    - Escrow waivers
    - many more factors and some are on a lender by lender basis that's why shopping around is important


    Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.



    Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.






    share|improve this answer




















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      4 Answers
      4






      active

      oldest

      votes








      4 Answers
      4






      active

      oldest

      votes









      active

      oldest

      votes






      active

      oldest

      votes








      up vote
      32
      down vote



      accepted










      To quote the poet Robinson... You better shop around.



      Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.



      However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).



      If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.






      share|improve this answer




















      • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
        – Johnny
        Aug 22 at 22:37










      • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
        – GOATNine
        Aug 24 at 16:26















      up vote
      32
      down vote



      accepted










      To quote the poet Robinson... You better shop around.



      Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.



      However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).



      If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.






      share|improve this answer




















      • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
        – Johnny
        Aug 22 at 22:37










      • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
        – GOATNine
        Aug 24 at 16:26













      up vote
      32
      down vote



      accepted







      up vote
      32
      down vote



      accepted






      To quote the poet Robinson... You better shop around.



      Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.



      However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).



      If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.






      share|improve this answer












      To quote the poet Robinson... You better shop around.



      Talk to a few other banks and brokers, tell them what rate you want, and if they can't get it don't bother applying.



      However, online "rates" are generally lower than you actually get - they are enticements to get you to apply with them, and there's always some reason that you don't apply for the best rate (or the rates have "moved overnight"). Also be very aware of rates that cost "points" (which is basically just pre-paying interest upfront).



      If you're worried about pulls on your credit, know that credit scores are modelled to allow a bit of "shopping around", the impacts are temporary, and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways.







      share|improve this answer












      share|improve this answer



      share|improve this answer










      answered Aug 22 at 13:30









      D Stanley

      45k7138146




      45k7138146











      • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
        – Johnny
        Aug 22 at 22:37










      • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
        – GOATNine
        Aug 24 at 16:26

















      • Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
        – Johnny
        Aug 22 at 22:37










      • Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
        – GOATNine
        Aug 24 at 16:26
















      Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
      – Johnny
      Aug 22 at 22:37




      Aren't you giving potentially bad advice? "and if a few extra pulls on your credit is going to make a big difference in your credit score, then you probably aren't eligible for the best rates anyways." So someone with less than stellar credit may be reducing their credit score by shopping around for a rate they'll never qualify for.
      – Johnny
      Aug 22 at 22:37












      Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
      – GOATNine
      Aug 24 at 16:26





      Speaking as someone who got a mortgage this year in Michigan. I shopped around on rates, and each subsequent "Hard Pull" within 45 days of the first had almost 0 impact on my score. I will note that a mortgage pull is different from, say, an auto financing pull, and will be treated separately as such.
      – GOATNine
      Aug 24 at 16:26













      up vote
      2
      down vote













      The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.



      As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.



      The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.



      You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.






      share|improve this answer
























        up vote
        2
        down vote













        The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.



        As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.



        The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.



        You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.






        share|improve this answer






















          up vote
          2
          down vote










          up vote
          2
          down vote









          The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.



          As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.



          The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.



          You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.






          share|improve this answer












          The mortgage broker should be running your information through several mortgage companies. That is their job. The broker should be able to provide a listing showing the basic parts of these different companies offers. They should also be able to show how items such as the down payment can change the terms of these mortgages.



          As other answers have mentioned multiple pulls in a short period of time don't cause your score to drop. The model knows this is the only way to compare rates. Though if you do this again just before you close on the house will make your lender nervous. They fear you will switch lenders, or about to make another large purchase.



          The rates offered are a function of down payment, credit score, debt to income ratio. These different loans can also include interest rate buy downs and other exotic options.



          You should review the range of mortgage options provided by your broker to make sure that you are picking the best one for you.







          share|improve this answer












          share|improve this answer



          share|improve this answer










          answered Aug 22 at 20:18









          mhoran_psprep

          61.5k784161




          61.5k784161




















              up vote
              0
              down vote













              Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.






              share|improve this answer




















              • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
                – Glen Yates
                Aug 24 at 19:19










              • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
                – CrossRoads
                Aug 24 at 21:14















              up vote
              0
              down vote













              Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.






              share|improve this answer




















              • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
                – Glen Yates
                Aug 24 at 19:19










              • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
                – CrossRoads
                Aug 24 at 21:14













              up vote
              0
              down vote










              up vote
              0
              down vote









              Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.






              share|improve this answer












              Rates can also be impacted by how much you put down, it used to be that having less than 20% meant you had to pay for PMI (private mortgage insurance) also. Your lender may also put your local/property taxes into your monthly payment and hold it in escrow, to ensure it was paid out quarterly on time. Those other costs would increase your total monthly payment. If you can afford to pay bi-weekly (every other week), you can pay off the mortgage sooner as well. When I was younger, we started out with a 30 year fixed loan, and arranged biweekly payments, so our loan would have been paid off in 21 years, saving us a ton on interest. We refinanced later when rates dropped, but kept the same payments, and ended up being paid off in 15 years. The result was we paid less in interest than the house cost, vs something like 3x in interest of the house value.







              share|improve this answer












              share|improve this answer



              share|improve this answer










              answered Aug 22 at 18:55









              CrossRoads

              101




              101











              • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
                – Glen Yates
                Aug 24 at 19:19










              • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
                – CrossRoads
                Aug 24 at 21:14

















              • "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
                – Glen Yates
                Aug 24 at 19:19










              • I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
                – CrossRoads
                Aug 24 at 21:14
















              "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
              – Glen Yates
              Aug 24 at 19:19




              "it used to be that having less than 20% meant you had to pay for PMI" - has this changed? I was under the assumption that this was still true. And even worse, if you have an FHA loan then you have to pay MIP for the life of the loan, whereas otherwise lenders are required to drop the PMI payment when your loan-to-value ratio drops below 78%
              – Glen Yates
              Aug 24 at 19:19












              I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
              – CrossRoads
              Aug 24 at 21:14





              I can't say. We've been mortgage free since 2003, 2005, somewhere in there. Still stuck with house insurance (and save there with 2 cars and house with same carrier); and quarterly property tax, but that's less than 1 mortgage payment was.
              – CrossRoads
              Aug 24 at 21:14











              up vote
              0
              down vote













              I had to answer because nobody called out the obvious.



              Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.



              Things to understand about what impacts your interest rate:



              - LTV = Loan to value. The higher the LTV the higher the hit to the rate.
              - Credit Score = lower the credit score the higher the hit to the rate
              - Mortgage product - Conventional, FHA, VA
              - Term
              - Escrow waivers
              - many more factors and some are on a lender by lender basis that's why shopping around is important


              Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.



              Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.






              share|improve this answer
























                up vote
                0
                down vote













                I had to answer because nobody called out the obvious.



                Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.



                Things to understand about what impacts your interest rate:



                - LTV = Loan to value. The higher the LTV the higher the hit to the rate.
                - Credit Score = lower the credit score the higher the hit to the rate
                - Mortgage product - Conventional, FHA, VA
                - Term
                - Escrow waivers
                - many more factors and some are on a lender by lender basis that's why shopping around is important


                Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.



                Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.






                share|improve this answer






















                  up vote
                  0
                  down vote










                  up vote
                  0
                  down vote









                  I had to answer because nobody called out the obvious.



                  Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.



                  Things to understand about what impacts your interest rate:



                  - LTV = Loan to value. The higher the LTV the higher the hit to the rate.
                  - Credit Score = lower the credit score the higher the hit to the rate
                  - Mortgage product - Conventional, FHA, VA
                  - Term
                  - Escrow waivers
                  - many more factors and some are on a lender by lender basis that's why shopping around is important


                  Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.



                  Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.






                  share|improve this answer












                  I had to answer because nobody called out the obvious.



                  Interest rates themselves are the same for all lenders. The difference is fees and how much closing costs you want to finance. The more closing costs financed the higher the rate.



                  Things to understand about what impacts your interest rate:



                  - LTV = Loan to value. The higher the LTV the higher the hit to the rate.
                  - Credit Score = lower the credit score the higher the hit to the rate
                  - Mortgage product - Conventional, FHA, VA
                  - Term
                  - Escrow waivers
                  - many more factors and some are on a lender by lender basis that's why shopping around is important


                  Watch out for the fees or variable things impacting the rate. Most buyers are unaware on how much impact to the rate they can control. House value, sometimes waiting for a better credit score, higher down payment, paying your closing costs all would impact your rate.



                  Important thing to remember is to find a mortgage broker you can trust and shop around like crazy. Ask for GFE's and compare them all. If anyone doesnt provide one to you you're red flags should go off.







                  share|improve this answer












                  share|improve this answer



                  share|improve this answer










                  answered Aug 24 at 15:50









                  Mike

                  613




                  613



























                       

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