02.06.08
The Loan Navigator: Rate vs. Closing Costs
Ever wonder why some advertisements offer the lowest rates and others offer the lowest closing costs but nobody ever seems to focus on offering both? It’s because rates and closing costs go up and down like a see-saw. Higher rates equal lower closing costs and vice versa. But how do you choose which level of rate and fees is best? Most lenders won’t give you much choice, they offer one or maybe two options at the most.
Naviloan solves this issue (and more) with its Loan Navigator.With just some basic information about your loan situation, the Loan Navigator searches through multiple banks for their best wholesale rates. It then presents you not with one, but with many options for rate and closing costs.
You can quickly see the relationship between rate and closing costs in the easy to read format that comes out of the Loan Navigator pages. Here’s the resulting information for a $417,000 conforming loan amount at 80% loan to value refinance.
We also roll all the fees into one number. Just one easy fee includes everything; appraisal, title, underwriting; everything.
Notice how on the 30 Year Fixed loan, a no closing cost loan is at 5.875% but a 5.5% can be had for only $4,653 in total closing costs. We can calculate the payback period as the difference in payment divided by the closing costs. In this case you’d save $99 per month with the lower rate. Divide that into $4,653 and get a payback of 3.9 years. If you plan to keep the loan more than 3.9 years, it makes sense to pay the closing costs because after saving $99 per month for 3.9 years, you’ve saved enough to pay for the closing costs. If you keep the loan for the rest of the 30 years, you’ll save over $30,000 versus the 5.875% no closing cost loan. Now that’s worth the extra four thousand up front!
So click on the link to the Loan Navigator and see just what your closing cost choices will be. It updates from dozens of lending sources several times a day to give you the absolute best rates available. At Naviloan, we understand that you want more choices than you get at a typical bank or broker. We show you all your options and let you decide which is best for you. Like our motto says, “More options. Better loans.”
03.15.07
How to survive the subprime meltdown
There’s plenty of news in the press these days about the subprime market falling out of favor. But how does this affect you if you have a subprime loan?
Many subprime borrowers are having trouble making their payments after their introductory teaser rate period ends. Most subprime loans over the last few years had a two year fixed rate and rates have really gone up over that same time period.
I was looking back at an old rate sheet from two years ago and it amazed me to see how low rates really were. I had forgotten that most people were easily qualifying for rates at or around 5% even with credit scores below 600. The bad news is that those same borrowers, if they do nothing, will have their rates jump as much as 3% when the fixed period on their loans is over. Some people could see their payments nearly double overnight!
At Naviloan, we want to help you avoid a bad situation. Here are the things most subprime borrowers need to know and that can help them avoid getting behind on their mortgage payments or worse, losing their homes to foreclosure.
1st- Know when your fixed rate period ends. Typically two years after you signed the loan but sometimes three or five. Better get those loan docs out!
2nd- Understand your ‘adjustable note rider.’ This will tell you the maximum amount that your interest rate will rise on the first rate change. Again- it can be as high or higher than three percent on many of the subprime loans from a couple years ago!
3rd- Talk to a mortgage professional about your refinancing options. Hopefully, you’ve kept your credit clean since getting that great low rate a couple years back and are ready to move beyond subprime. Ideally, you’ll be able to get a much better loan now than you did before. You did keep those credit card balances down after consolidating your debt, right?
4th- If your rate is already rising- don’t panic, and above all else, don’t fall behind on your mortgage payments. Always make your mortgage payment first, even if you have to fall behind on your credit cards or other debt. Miss a mortgage payment and not only does your credit score go down, but mortgage lenders see your risk go through the roof. They count every ‘mortgage late’ as a very serious hit against you. Too many lates and you may not even qualify for a refi!
That’s the death spiral into default… it begins when you’re not watching and suddenly your payment rises. You miss a payment or two and then your credit goes down. You’ve finally had enough, maybe the payment goes up one more time, and then it’s too late. Because of the missed payments, you can’t qualify for a better loan to save you from this mess.
If you need help figuring out your options, give a Naviloan mortgage expert a call. We can help you figure out your payment changes and see if you qualify to get into a safer loan.
go to www.naviloan.com for more information or click below and we’ll call you now
