Evaluating mortgage offers is so important in today's day and age. With interest rates higher than we've seen for 25 years, you want to make sure you're getting the best deal. But it's not always easy to figure out what is actually the best deal. So I'm going to talk today in my Tip of the week a little bit about how do you evaluate at mortgage offers from different lenders and look at the differences and figure out really what is the best offer. So before I get into that part of it, the first thing that I wanted to inform you about is that mortgage rates change every day and sometimes even during the course of the day, kind of like the stock market, rates go up, rates go down.
So it's very important when you're looking at lenders and comparing offers that the offers are at the same, ideally the same time of day. But definitely you want to make sure you're getting those offers on the same day because rates can fluctuate drastically, sometimes from day to day, depending on what's happening in the news and the markets. So that's the first thing. The second thing is there's more to choosing a lender besides just what kind of interest rate they can offer. There's things like responsiveness service, helping you get your offer accepted by the seller, by the little things that local lenders can do for you. Also making sure that you actually close your transaction on time, which is absolutely critical because if you don't close on time, a couple of things could happen.
You could, first of all, lose the house completely, which means who cares what the rate is? Or you could run into expensive lock extension fees. So if your lock is, let's say, 30 days and the closing takes 40 days, you're going to have to pay a lock extension fee, which can be very expensive. So keep that in mind. So when you're comparing offers, one of the biggest things to look at is not just the interest rate, but look at if there's points charged on the estimate. So many lenders, especially big box lenders or online lenders, they're going to quote you an interest rate with points. So what points are is one point is equivalent to 1% of the loan amount.
And so let's say $500,000 loan, that's a $5,000 fee that you pay at closing in an effort to get a lower interest rate. So if the lender isn't informing you about what points are, and they're just quoting a rate and not really explaining what's going on with their estimate, they could pull the wool over your eyes and you end up with an extremely high cost loan that results in a lot of closing costs, despite the fact that it's a lower interest rate. So that's something to look at and really evaluate. And a really skilled and knowledgeable lender will help you to look at the options side by side of what it looks like short and long term, either with points or without points, instead accepting a higher interest rate, what makes the most sense financially for you in your situation.
So these are important considerations and also just to look at the other fees that are involved with the transaction, make sure that the lender is not sticking junk fees or higher additional fees in there. So all these are very important factors, not to mention the fact that you want to make sure that the lender is truly listening to what your situation is and helping to advise you as to the best loan program for your situation. So the interest rate is one thing, but what's the best loan program for what you're looking to accomplish and what you can qualify for? So I hope that helps you out as you're searching for lenders. My name is RJ Baxter with Intercap Lending.
Give me a ring if I can help you out to look at different estimates with your lenders and provide an estimate for you and you have a great rest of your day. Thanks a lot.
RJ Baxter
Intercap Lending
http://www.cohomesandloans.com
303-670-0137
baxterteam@intercaplending.com
NMLS #395819
