Rates continue to hold steady right now. As of this post rates are in the high 4’s to low 5’s paying 1 point (or 1% of the loan amount). Undoubtedly, you are hearing rates ranging all the way down to the mid 4’s. We are telling you now that you cannot get there without paying more than one point. If you want to really know where rates are at then call us and we will keep you in the loop.
I had a client call today telling me they found a place that was doing 5% without any points. He even had me visit their website where I could see exactly what they said. So I went ahead and called them and shopped. Here is a very popular trick lenders play…when I asked the right questions regarding their rates and fees I learned there surely was not a point. However, they had a 1% origination fee. Folks, discount points and origination fees are one in the same. It is tomato tomatoe. They are not different, except by their title. Either way you are paying 1% of the loan amount to buy that rate down. This is a pathetic effort by these lenders to mask what you are really paying. And the reason they do it is because you have been trained by this industry to ask, “Am I paying any points?” The answer in this case was, “No” because you were paying an origination fee; but they are not going to tell you about that until further down the line when you think it is too late. Just know, it is NEVER too late to back out.
Here are three major things that will affect your interest rate:
1. Credit Score.
2. Loan To Value (LTV).
3. Purpose of loan. Are you pulling cash out? If so, this will hit your rate. And keep in mind that those of you with a first and second mortgage that you want to combine, if the second was not part of the original purchase of the house then your new loan is considered a cash out refinance even though you are not getting cash back.
Your rate will be directly impacted by there three factors the most.
Also, a big guideline change we are dealing with now is that your Debt To Income (DTI) ratio cannot exceed 45%. DTI is the percentage of your income that goes to pay debt. There are compensating factors that will allow you to go over this limit, but you have to meet three of them in order to be considered. This is a fairly substantial change that is affecting some people’s ability to get qualified.
Bottom line, if you or anybody you know is interested in buying a house or refinancing then have them call us first so we can walk you through the process and help you evaluate what is best, and what is the truth.