Now would be a good time to stop and talk about points on a mortgage. When a person looks in the paper and sees a number of mortgage companies offering loans, not only will the interest rates for different loans be listed, but also the points for each type of loan. A point represents one percent of the total loans, this is the money that the lender or broker makes on the sale of the mortgage being offered. When making a bad credit home purchase, great care needs to be made in all of the fees and points added to the cost of the mortgage. Origination fees, discount fees, broker fees and yield spread premium are all different ways of saying the same thing. A fair type of loan will list all of the points in an upfront manner. A scammer will charge many more points than the industry recognizes as being fair. Sometimes a borrower has the opportunity to pay more points to buy down an interest rate, and if the borrower knows he/she will be in the house more than five years, that option could make sense.
Cont.
Now would be a good time to stop and talk about points on a mortgage. When a person looks in the paper and sees a number of mortgage companies offering loans, not only will the interest rates for different loans be listed, but also the points for each type of loan. A point represents one percent of the total loans, this is the money that the lender or broker makes on the sale of the mortgage being offered. When making a bad credit home purchase, great care needs to be made in all of the fees and points added to the cost of the mortgage. Origination fees, discount fees, broker fees and yield spread premium are all different ways of saying the same thing. A fair type of loan will list all of the points in an upfront manner. A scammer will charge many more points than the industry recognizes as being fair. Sometimes a borrower has the opportunity to pay more points to buy down an interest rate, and if the borrower knows he/she will be in the house more than five years, that option could make sense.
