Why the Lowest Rate is NOT Always the Best Deal!

After reading this document, you will better know how to identify the best deals, and you’ll realize that it’s not always the lowest rate that’s best for you. This report will break the mold of common thinking that it’s all about rate and reveal common sense financial implications of various loan scenarios.

As I work with clients throughout the country most of the questions that I hear all revolve around one key concept.  Everyone wants to get the lowest rate!!!! Most people do not even care about how they get to the lowest rate they just want to get the lowest possible numerical percentage.  I even had a customer that paid $20,000 to get the rate down from a 6.4% to a 5.6% rate and then sold the house in 18 months!  Now on the surface that might sound like a good idea, but when you look at the numbers the customer spent $20,000 cash to save $280 per month for 18 months which only saved him $5000 for the life of his loan.  In my opinion the best place for my money is in my pocket and I will pay a little more because I don’t want to have to refinance my house to pay for Christmas gifts.

Here are two other big myths that I encounter on a daily basis.

Myth: Fannie Mae and FHA loans offer the lowest payments available.

Fact: Not necessarily. Fannie and FHA require monthly mortgage insurance when you have less than 20% down, and the amount you need to pay depends upon how much money you put down. A program that doesn’t require mortgage insurance, even though it may have a slightly higher rate, can have a lower payment, and more tax breaks. By the way, mortgage insurance is insurance that protects the lender in case you don't pay your loan, so there's no value to you. An excellent borrower could pay $135 per month in mortgage insurance on a $150,000 loan at 100% financing. Even with a 6% rate, the payment will be about the same as a non-conventional loan at 7.5% to 8.0% with no mortgage insurance. The difference is that the mortgage insurance is not tax deductible, whereas the extra interest may be. 

Every bank throughout the United States has 100% financing or has a relationship with another bank that will provide the 20% down payment loan needed if they will not provide the remainder.  Additionally we all know that an open market where you the consumer can negotiate for yourself is much better than someone else negotiating for you.

Myth: The lower interest rate costs less over time and I'll eventually get rid of mortgage insurance.

Fact: True, but if you’re not planning on staying in the same loan for the life of the loan, this point is irrelevant. With the average American staying in their home just under 5 years before moving on, this argument loses it weight. The savings you’ll have by not paying mortgage insurance combined with the extra tax breaks of paying extra interest instead of mortgage insurance will far outweigh any potential costs of the higher rate. This leads into why interest-only loans make sense, but that's another topic.

REAL LIFE EXAMPLE:

We had a client who was offered a 5.25% rate from another company, but with $289 per month in mortgage insurance. When they were comparing rates, our 6.4% rate was unacceptable to them. But, when that 6.4% had no mortgage insurance or up front discount points, the payments and up front costs were lower, much lower, making it a better deal. The client will save thousands per year going with our program. So, as you can see, it’s not always about rate. You must look at the total picture. Up front costs and monthly payment comparisons must be done to determine the best deal. If we cannot provide you with the best deal, we will help you identify which one of our competitors has it. How to determine the best Closing Cost estimate is another topic...Again, it's not always the lowest bottom line number...

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 203-483-0061 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,
Chris Rivers
Chrysalis Funding
150 W. Main Street
Branford, CT 06405

Phone: 203-483-0061

P.S. If you would like to get started now please click the following link or image below to fill out a Free No-Obligation Secure Online Application and we will contact you to schedule a free consultation to help you get the home of your dreams with the best terms available...regardless of your credit!