Palm Beach Real Estate and Loans

OK- so you've decided to purchase a new Home (or refinance one that you already own) and you just don't have the ability to pay cash for it.   You're certainly not alone!  Or, you might have the cash, but you don't want to tie it all up for the time being.

So - it's time to go look for a Mortgage.

Easy - your neighbor, buddy, coworker or the actor with a single digit IQ on the TV told you exactly what to do: no matter what, get the LOWEST RATE!

Now, at first, that seems to make a lot of sense.

Then... hopefully you start to put more thought into it.  Unfortunately, way too many people don't!

They get so hypnotized by RATE that they forget that there is a lot more going on.....

One of the biggest problems / annoyances crops up when people start asking around for "The Best Rate!".  They usually start the inquiry off with "Now, you can't fool me ..." - actually, yes I could (if I wanted to) and when someone talks like that, they are basically begging to be lied to.

The biggest reason is this: the Mortgage business is extremely competitive -  there are a lot of wholesalers out there and if one Mortgage Company is using a particular one then almost every other one in the area is too.  In other words the same rates are really available through MANY companies!  For example: if you could be approved for a 30 year fixed-rate loan @ 6.0% with Broker A, then Brokers B, C, D, etc can give you the SAME thing. 

The attraction to a low rate is so strong that Consumers make a lot of mistakes - I've seen way too many occurrences.

Let's look at the TERM of the loan - say a 15 yr fixed vs a 30 yr fixed.  The rate on the 15 yr loan will be lower BUT the monthly payment will be MUCH higher because of the shorter term.  A lot of you that are reading this (I hope) are saying to yourselves "Of course!"  - but I have had several instances where someone came back to me and said that the other company's rates were lower and after taking a quick look at the paperwork I saw that it was for a different loan!  In one instance a gentleman showed me the paperwork another company had given him, the rate was lower.  I brought up the minor point that his payments were much higher however because the term was shorter.  It took another explanation or 2 - but he finally got the point. 

You also need to pay attention to the TYPE of loan you're getting.  I've also seen it happen where someone is offered a very low start rate on an adjustable loan - great!  However they did plan on being in that Property for at least 10 years and they missed the fact that the interest rate was going to start to increase in 2 years.

Another thing that can be overlooked when you're only thinking of the rate are the CLOSING COSTS.  "Company B is offering me a rate that's lower than yours!"  Ok, let's look at what they're charging you.....  yup-their rate IS lower, but they are charging you MUCH more for the loan! 

PRE-PAYMENT penalties can also be overlooked - A is offering you a lower rate than B - but A's loan also comes with a 3 year pre-payment penalty, while A's has none.

I know this is a lot to digest.  It would be great if the rate was the only thing you had to worry about, but it's not. 

The only time rates can truly be compaired is when the loand in question are the same TYPE, have the same TERM, have the same PRE-PAY penalty and have the same CLOSING COSTS. 

THEN the lower rate is the way to go.

Always make sure that you are dealing with a Mortgage Broker that explains everything to you - or you might get taken for a ride.

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