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Is the Best Mortgage Rate Important?

Mortgage clients have often said "I need the best mortgage rate, what rate do you offer?"

While the client is always right, and I always want to provide the best rate and terms, you need to look at the "extras" when selecting the "best" mortgage. Extras include:

•     Low prepayment penalties
•     Generous pre-payment privileges
•     Cash back
•     Rate lock options on a variable
•     Free home warranties
•     Professional mortgage planning
•     Low lender fees (if applicable)
•     Portability
•     Missed payment flexibility
•     Early payout penalties

Clients can be swayed by even a 0.1% savings on mortgage rates.  But when you do the math, the relative importance of the "extras" becomes clear.  A 0.1% savings on a typical 5-year $250,000 mortgage amortized over 25 years equates to:

    A difference in monthly payment of only $14
    A savings of just $840 over five years on your mortgage payments

Just one of the extras above could offset this many times over.  Think about this the next time you want to ask what my best 5 year rate is!

Last changed: Dec 20 2011 at 9:51 PM

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