For best results, it is best to disclose as much information as truthfully as possible to be
able to ascertain that each lender can present the best plan from among the types of
mortgages that are available for your particular need and is well within your paying capabilities. For the sake of fair comparison, make sure you have the same points of reference (e.g., amount of loans, terms of payment, interest rates) for all types of mortgages you want to check, and don’t forget to include inquiring after the option of obtaining an owner-financed mortgage; it is rumored to be the best win-win deal for all concerned parties.
Getting more and more popular are these types of mortgage plans: the zero-point mortgage,
the no-cost mortgage, and the super-jumbo mortgage.
A zero-point mortgage is the one where the borrower chooses to not pay points to buy the
interest rate down, yet will still pay for the base closing costs (i.e. escrow, credit
reports, documentation fees, appraisal fees, etc). What does that mean? Simply that a
borrower gets mortgage rates without having to pay out-of-pocket costs for broker’s
professional fees or other hidden fees. The lender pays for these. As a result, it leaves
the borrower with just plain, straightforward loan that he can easily refinance for a small
drop in rates after some time. The zero-point type of mortgage has no up-front expense for
the borrower that needs to be recovered, hence the very low interest rates. This type of
loan is a good deal only when the lender pays for closing costs from rebate points up front
instead of increasing the borrower’s loan amount.
On the other hand, with the no-cost mortgage, the borrower signs up for a higher interest
rate (around .25% - 375% higher than a zero-point mortgage plan, generally) but, as a
trade-off in his favor, the lender or broker ends up paying for all the non-recurring
closing costs (except interest, taxes and insurance payments). No-cost loans are not
practical for a borrower who intends to pay beyond the so-called break-even period. Simply
put, the break-even period refers to that point in time where the cost of a higher interest
rate over time merely equals paying upfront costs—beyond this point, the no-cost loan has
higher costs.
Then, there is the super-jumbo mortgage which grants loans that exceed $650,000 and has a
rate that is 25 percent higher that average mortgage plans.
As you can already gauge by now, there ARE several types of mortgage loans available out
there and shopping for the right one for you is very much like shopping for any item. It
will therefore save you a lot of money if you take the time to look around and compare
several types of mortgage payment plans first, before actually going out there and strike
the deal. Note that different lenders can offer different interest rates and mortgage fees
and the lower the interest rates, the bigger the savings for you.
Brian Shelton makes home
buying in the Dallas easy! Visit http://www.StopRentingDFW.com/
