In early October 2021, we are beginning to see mortgage interest rates rise from the historical lows of the last year. However, many online lenders are still offering those low rates from a few weeks ago, BUT these lenders are not being forthcoming in what it’s costing to now get that low interest rate. They are planning on borrowers getting caught up in “getting the lowest rate possible” and not investigating what that advertised rate will cost them.
At Indigo Mortgage, we encourage borrowers to take a pause when looking for a new mortgage whether it’s a new home purchase or a refinance. We are all for getting the best rate but what are you willing to pay to buy down that rate?
The most effective question to ask your potential mortgage lender is, what is it costing me to get the rate you are offering? More specifically, ask what origination and discount fees will be charged. Make sure to ask for both origination and discount fees!
If you can get the lender to disclose those 2 fees, origination and discount, then you can easily compare offers. Any fees outside of origination and discount fees are going to be exactly the same for all lenders as those will be title and escrow account charges. Sometimes the lowest rate is not the best option, if its costing thousands of dollars just to buy it down to get that low interest rate.