When you see or hear commercials for mortgages, they usually focus on one thing – the rate.  But is the interest rate being offered all you need to consider?  Of course not.  You need to consider all the costs, as well as the effect the loan will have over time in reducing the amount you owe on the loan.  And of course, the interest rate is of little value if you are sold on a program that is not in your best interests or fails to accomplish your long-term goals.  So why is there so much focus on rate in advertisements?  That’s easy – most people will not take the time to really understand their mortgage and how it will impact their finances for years to come.  Rates are numbers and people will see lower as better– therefore, many lenders will quote the lowest rate possible to make the phones ring.  In our opinion, this is a very bad model because some loan officers and mortgage companies manipulate the rates they show by charging Points, Origination Fees, higher closing costs, and use non-traditional names for fees not charged by other lenders to make the rate look lower.  This results in a very low interest rate, but the upfront money it takes to pay these costs may be less beneficial than paying a slightly higher rate.  On a refinance, when those costs are added to the loan balance, a borrower may not see themselves breaking even on the cost of the loan for 5 years or more. 

What about A.P.R. (the Annual Percentage Rate)?  Can’t you just compare the A.P.R. to know which program has the lowest rates and fees?  Unfortunately, the A.P.R. is widely manipulated by charging Points or Origination Fees to make the A.P.R. number lower.  For instance, if you compare two loan programs and one has an A.P.R of 5.02% and the other has an A.P.R. of 4.867%, you might think the 4.867% offer is the best deal.  But if you took a closer look, you would discover you are paying $3,000 more for the lower rate for only a drop of .25% in your interest rate.  And on further examination you would find you owe more on the lower rate loan after 3 years than on the higher rate option.  When making such a big financial decision, you really want to work with someone you trust that will help you understand the details so you can make the best decision.

Churchill Mortgage can assist you and make sure you avoid making costly mistakes in obtaining your financing. Give us a call at 1-888-562-6200 or head to our website www.churchillmortgage.com to Request a Call Back and one of our Loan Specialists will contact you at a time that is convenient for you.