With mortgage rates being at or near historic lows, Colorado homeowners always want the lowest mortgage rate they can get on a new home loan or a refinance. But be careful that you don’t make the low rate your idol. What does that mean? It means that you can make a big mistake by focusing on the lowest interest rate but not taking into account what that low rate is costing you, or if it is even helping your situation.

Let’s say a borrower is determined to get a low rate, say, below 3%. Some lenders will give them that rate, but it might come with huge fees. Some of those lenders don’t advise the borrower what the cost is, meaning it could cost many thousands in points to buy that rate down.

If the cost to buy down the rate is in the thousands of dollars, then the loan amount usually has to go up to accommodate the higher fees. That combination of high closing costs and a larger loan amount can nullify the benefit of that low rate.

We encourage borrowers to steer clear of the big lenders, especially the one whose names rhymes with “pocket”… we’ve seen them offer low rates with very high fees to borrowers. Shop your mortgage but be sure to shop local, and include a local mortgage broker like Indigo Mortgage.