Hi, I’ve had to go through the same issues you face when financing a
home recently, and so here is what I found.
First, the best guide to mortgage rates to start with is the
newspaper, and your Salem daily, the Statesman Journal, has these
updated regularly. They are actually on line now, at this link:
http://online.statesmanjournal.com/mortrates.cfm
In case the Portland paper is more comprehensive, you might check
their similar listings (this is the Oregonian) which will probably
include banks that are statewide:
http://www.oregonlive.com/mortgagerates/
The second place to look for mortgage rates is a firm which works with
many banks (theoretically almost all of them, in many states) and
these places will claim at least to find you the best rate and go with
whatever bank it is. A glance at your newspaper listings makes it look
like most of them fall in this category. This often works but you have
to pay attention to the fees quite closely.
There are such places on line, as well, which at least can offer
information of some value, even if you never use them for a loan. A
list of various very helpful sites follows.
A terrific overview of the different mortgage categories can be found
at About.com at this site:
http://financialplan.about.com/library/weekly/aa041200a.htm
Also at the financial planning page of About.com there is a persuasive
argument for 15 year mortgages:
http://financialplan.about.com/library/weekly/aa081901a.htm
And then this site by the (Re) Finance Center has specific advice and
lots of links for refinancing specifically.
http://www.reficenter.com/refinance/advice.htm
They often have simple solutions to questions, such as whether or not
to pay points (their advice: if you are going to stay 3 years or less,
don’t pay points, more than five years, go ahead and pay points).
You might trust an independently validated source, such as this
article on U.S. News and World report which has important refinancing
information, including an online calculator:
http://www.usnews.com/usnews/nycu/money/morefcal.htm
This finally brings us to where you stand. Since there are so many
variables (how much can you afford to put down, how long will you be
living in the new house, can you avoid PMI, is your income likely to
increase over the next decade or more, etc.) it is really hard to be
completely concrete. This is where it helps to go to a mortgage house
and tell them your situation. They will PROBABLY steer you right.
One thing I did was go to three different places to see what they
would offer (one was just on the phone). This was more work, but it
paid off by finding someone who was flexible and honest, and we got
the best rate at the time. It’s intimidating to do that because they
pressure you to make a commitment. Be firm and say you are just
looking for what they can offer and tell them up front you aren’t
making a decision or commitment that day. Then they’ll feel obligated
to come up with something competitive.
But let me finish by giving some of my own experience in getting the
best deal. First, I found I had to create a list of fees from each
place. Some of the fees will sound the same, others will be unique to
each place (or be given different names). But the idea is to come up
with a list that is complete, and then a total will emerge. You’d be
surprised how different the results can be with different lenders. The
fees you pay (or not) are right out of your pocket, and they don’t
lower your interest rate, so take them seriously.
Points are different, because by paying points you can get a lower
interest rate. Then you need a chart or calculator to compare monthly
payments. One on-line calculator is at interest.com:
http://www.interest.com/calculators/
But these are all over the web if you look.
Without knowing your specifics, here is what I suggest, not as a
professional but just as someone who has been through it before:
1) Decide between a fixed mortgage if your income is fairly flat and
an adjustable rate if your income is expected to rise substantially in
the coming years. (Or just choose a fixed rate if you are nervous
about having an interest rate change on you at all.)
2) Then ask whether you can afford a 15 year mortgage...this might be
done by doing some trial calculations with different rates and
amounts, or you might just ask whether you are in a comfortable enough
spot to swing the slightly larger 15 year payments.
3) If you might possibly move in 3 years, avoid points. If you are
settled in for the long haul (you are refinancing with the intention
of staying, I assume), you might consider a point or two if you have
the cash.
4) Then go to a list of mortgage rates and now you have a specific
category you’ve narrowed down to even before comparing interest rates.
At this point, you want the lowest interest rate. Find SEVERAL at this
rate, if you can. Then call or visit these lenders and ask for a
complete list of fees. Once you find the one with the smallest fees,
that should be it. (By the way, you’ll find the many fees are
unavoidable, and all will have them--certain taxes or insurance fees
or title searches. These should be the same more or less. Then you’ll
notice the big variables...bank fees, bank attorney fees, processing
fees, those kinds of things. You’ll actually find someone with
relatively small add-on fees. You will!)
Is that a help?? Please let me know if I’m leaving out something you
clearly need. Between the web sites above, my own advice, and a call
to a bank or mortgage lender or two, you’ll suddenly feel like an
expert.
My search strategies:
mortgage pay points
mortgage 15 year 30 year
mortgage calculator
Oregon newspaper (with links to individual newspaper sites)
Good luck!
-lmnop-ga |
