Shopping around for mortgages can be a daunting task. With paperwork aplenty and big words around, it’s no surprise that most people only want to go through the process once. It’s easy to by influenced by friends, family and colleagues
If you have been asking around about mortgages, you’ve probably heard conflicting messages; with one being that rates are constantly rising, and the other being that rates are at historic lows. In reality, these statements are both true. With this in mind, it may seem like mortgage rates constantly change, and they do. The rates fluctuate daily in accordance to the economy. In a stronger economy, it costs more to borrow money for both you and the bank, and in a weaker economy, rates drop to add a cause for people to borrow.
Interest is worth a lot
Because of the nature of interest rate fluctuations, and with that being changes of fractions of percentages, first-timers get complacent because they don’t know how much that fraction of a percent can add on. Half a point can add up to thousands of dollars over the course of the loan, and because many people don’t understand this, they don’t mind small changes to the rates that happen while they’re not looking.
There are two payments that are involved in a mortgage that don’t involve the loan, being the origination fees and points. Origination fees cover costs that close the loan, like compensating the loan officer and points are payments you can pay to the mortgage company in exchange for a lowered rate. Like in any industry, lenders have their own fee structure, and in some cases, you can even negotiate to waive or lower fees. Shopping around will help you find the structure that best suits your needs.