Sometimes The Lowest Mortgage Rate Isn’t The Best.

It may be tempting to find the lowest rate and go with that lender. But is that really the best? The answer is, “it depends”.

First of all, you have to look at the terms of your loan. Is it a 15-year or 30-year fixed? Is it an adjustable rate? How long is the initial fixed period on an ARM?

Watch our video to learn more about how to choose the best terms for you.

If you are looking for a 30-year fixed-rate mortgage and one lender has your rate at 5.00% and another at 4.75%, clearly you will want to go with the lender offering 4.75%. However, if one rate is at 5.25% but offers no points and no closing costs, while the other has a 4.75% rate but requires two points and $4,000 in closing costs, then you need to do some math to determine which option is better for you.

Similarly, if there are two lenders offering a similar rate and one provides a rebate of $1,000 toward your closing costs but charges a higher mortgage insurance premium than the other loan program, then you should compare all of the numbers together to see if paying some upfront costs and having lower monthly payments is better than lowering your monthly payment by paying less upfront.

A client recently shared their neighbor told them, “no matter what, get an FHA mortgage when cashing out of your home equity.” 

While FHA loans have easier qualifying guidelines than Conventional loans do; they do have some additional costs that Conventional loans don’t have.

We put the two mortgage programs, FHA and Conventional, together, and ran them through our total cost analysis calculator. We quickly found out that a conventional loan is more cost-effective for them. 

Even though the conventional loan has a higher rate, there is no upfront mortgage insurance and you can eventually remove the mortgage insurance. Conventional monthly mortgage insurance is half of what the FHA mortgage insurance is. 

Before you choose your lender, terms, and rate, let me run a Total Cost Analysis for you. I can compare all your options and tell you what loan is going to give you the lowest monthly payment and what loan is going to have the lowest cost over the life of the loan.

My name is Edgar DeJesus. I’m the mortgage advisor and branch manager of Treasure Coast Home Loans. 

Today’s market requires you to have a skilled negotiator and consultant, like me, helping you and the people you care about right now.

Call or text, (772) 444-6362, with any questions that will let me separate opinion from opportunity.