Looking Beyond the Interest Rate for a Home Mortgage

HomeBlogLooking Beyond the Interest Rate for a Home Mortgage

It is a common misconception that the only difference between different mortgage offers is the interest rate. If you’ve been preapproved by two lenders, with one offering a lower interest rate than the other, you may want to do a bit deeper to learn what else is involved before making a final decision. Your mortgage broker will be able to guide you when looking at the various loan costs and terms so you know exactly what you should choose and why.

Looking Beyond the Interest Rate for a Home Mortgage

One of the things to look at with a home mortgage is the mortgage loan fees. There are various fees to consider, including underwriting fees, processing fees, lock-in fees, and points. The biggest thing to know about points is that it matters how long you plan to remain in your home. It also matters how much of an interest rate reduction is granted with each discount point.

Paying upfront points lowers your interest rate, but it can take anywhere from 5 to 12 years to recoup them. If you plan to move sooner than that, you are better off with a higher interest rate home mortgage with few or no points. You should also consider if there are other ways you could use the money that you’d pay in points that could better improve your financial position, such as paying off a high-interest credit card.

Another thing to look at in a home mortgage is if there are any prepayment fees. Again, this matters most if you plan to relocate at some point before the mortgage has been paid off. It can also come into play if you try to refinance down the road.

If you would like to know more about the different factors to look at when securing a home mortgage, reach out to us at Harbor Mortgage Company. We look forward to helping you achieve your dream of owning your own home, and doing so with terms that fit your financial goals for today and the future. Contact us today to learn more.