How do I find the least costly mortgage? Does it make sense to pay more points for a lower interest rate?
You can save real money if you carefully shop for a mortgage. Everything else being equal, even a one-quarter percentage point difference in interest rates can mean savings of thousands of dollars over the life of a mortgage. A popular option recently has been “interest-only” loans, which allow you to pay only the interest amount each month — not any principal — for the first ten years of the loan. This can lower your initial monthly payments significantly, allowing you to afford more house. Most interest-only loans are adjustable, but it is possible to find fixed rate interest-only loans too. In addition to comparing interest rates, there are many types of fees — and fee amounts — associated with getting a mortgage, including loan application fees, credit check fees, private mortgage insurance (if you’re making a low down payment), and points. Since points comprise the largest part of lender fees, it’s important to understand how they work: One point is 1% of the loan principal. T
You can save real money if you carefully shop for a mortgage. Everything else being equal, even a one-quarter percentage point difference in interest rates can mean savings of thousands of dollars over the life of a mortgage. A popular option recently has been “interest-only” loans, which allow you to pay only the interest amount each month — not any principal — for the first ten years of the loan. This can lower your initial monthly payments significantly, allowing you to afford more house. Most interest-only loans are adjustable, but it’s possible to find fixed rate interest-only loans too. In addition to comparing interest rates, there are many types of fees — and fee amounts — associated with getting a mortgage, including loan application fees, credit check fees, private mortgage insurance (if you’re making a low down payment), and points. Points comprise the largest part of lender fees, so it’s important to understand how they work: One point is 1% of the loan principal. Thus,
