Question: Hi, I am new in the process of looking around for a mortage loan and I was wondering if anyone can shed me some light on this complicated market. What puzzles me most at this moment is that I noticed almost all the private lenders (loan companies) have a mucu lower interest rate for both fixed and flexible rate. I don’t understand that if this is true, then what is the catch up? Whay those major banks with higher interest rate can still survive? What should be the criteria when shopping for a loan? Any advise or comment is highly appreciated. Thanks.
Answer: I have heard from other people that very often with mortgage brokers, if rates are moving at all, they almost never are able, somehow, to close within the lock period. Also, they often make up for low rates by having exhorbitant “fees” associated with the mortgage. When comparing, DON’T just look at interest rates and points. The extra fees associated with the loan can often be a point or more, so ask about ALL fees.
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