Question: > Hi i’m buying a new townhome and had some questions on home mortgage > loan: > how do i find the best deal on mortgage rate? i looked at eloan, and > some online loan companies and they all come pretty close. i haven’t > tried my bank yet. bank of america. do most people take out loan with > their bank?
> the townhome is priced at 205,000 and i plan to place 20% down > payment, ,my credit score is in the upper 700’s, close to 800. what > kind of mortgage rate should i be expecting?
> should i go with 15 year or 30 year? i’m leaning more toward 15 year > since the rate is lower and monthly payments aren’t much more than the > 30 yr payment. or should i go with 30 yr and invest the difference?
Answer: When shopping for a home loan, there is much more to consider than just interest rate. Your APR is a more appropriate indicator of your interest rate plus all the loan chages that typically get rolled into the loan. I recommend using a wholesale broker, becase they can shop your loan with several lenders and find you the best deal for your specific situation. Your bank is usually not the best option becase you are limited to just thier lending portfolio. As for rate, there are many factors that will influence this; credit score, payment history, assests, debt to income ratio, etc. If circumstance are all great, expect to get a mid 5 interest rate for a 30 year fixed, give or take. A good lender will typically charge you a 1% origination fee, and they also make 1% from the money source. There is no such thing as no closing cost loans – if your not paying something to borrow the money, your getting hit with a higher rate – either way the lender is profiting somehow. If your being charged more than a 1% origination fee, ask your lender why. Although 15 year rates are a little bit better, I sometimes recommend my clints take the 30 year, but make payments based on a 15 year payback schedule. This way, if you ever run into tough times (or whenever you want), you can fall back on the cheaper payment temporarily in order to get thorugh.
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