Breaking Down Mortgage Rates and Costs
By: Jase Stevens
Nov 4, 2018
Nov 4, 2018
Get To Know Mortgage Costs
Getting a mortgage requires more finances than just your down payment. Closing costs can add thousands of dollars to your total upfront costs, and typically fall between 2-5% of the purchase price of the home. Some closing costs are charged by the lender for facilitating the loan, but most are mandatory third-party fees associated with finalizing the purchase, confirming your legal ownership of the home, and prepaying property taxes and insurance.
Let’s Take A Quick Look At What Your Closing Costs May Include:
A lender is required to give you an official Loan Estimate, which includes a breakdown of all of your estimated closing costs within three days of full application being submitted.
Understand How Rates Work
There are actually quite a few factors that go into determining the mortgage rates that will be available to you. There’s the current financial market, your financial details (especially your credit score), the details of your property and loan, and the pricing a lender can offer based on all those factors. An important thing to remember is that you have control over your rate, too. You can “buy” a lower rate by paying a lender more up front in the form of prepaid interest called “points.” Or you can take lender “credits” to lower your closing costs, in exchange for a higher rate.
Learn About Locking A Rate
Since interest rates can fluctuate daily based on how the market is doing, locking your rate protects you from these fluctuations going forward. When you lock your rate, your lender will commit to honoring that day’s rate options, even if rates go up later. Locking your rate is the first step to starting the loan process. You can lock your rate once a loan estimate has been delivered and accepted and through our Rate-Lock-Guarantee you can lock in your rate even before having a signed purchase contract. This benefit offers a great piece of mind and the confidence to continue your home shopping all while having your low-low interest rate locked in.
Locking a rate may seem final, but there are still quite a few things you can do once you’ve locked, such as changing your loan type, choosing to pay points or take credits, making changes to your application, or taking advantage of market changes (this is sometimes called a “float down” option).
Getting a mortgage requires more finances than just your down payment. Closing costs can add thousands of dollars to your total upfront costs, and typically fall between 2-5% of the purchase price of the home. Some closing costs are charged by the lender for facilitating the loan, but most are mandatory third-party fees associated with finalizing the purchase, confirming your legal ownership of the home, and prepaying property taxes and insurance.
Let’s Take A Quick Look At What Your Closing Costs May Include:
- Fees associated with your rate: if you choose to pay “points” up front in exchange for a lower monthly rate
- Lender fees: sometimes called application, servicing, or origination fees (Home Lenders USA does not charge lender fees)
- Third-party fees needed to finalize your loan: includes appraising the home value, getting a flood certification, and getting your credit report
- Title and recording fees: these are fees related to ensuring you have a legal claim to your home and recording your status as the owner with the government
- Prepaids: these are fees that will be part of your monthly mortgage bill, some of which you are required to “prepay” at closing. They can include property taxes, homeowners insurance, mortgage insurance (if you put less than 20% down), and interest
A lender is required to give you an official Loan Estimate, which includes a breakdown of all of your estimated closing costs within three days of full application being submitted.
Understand How Rates Work
There are actually quite a few factors that go into determining the mortgage rates that will be available to you. There’s the current financial market, your financial details (especially your credit score), the details of your property and loan, and the pricing a lender can offer based on all those factors. An important thing to remember is that you have control over your rate, too. You can “buy” a lower rate by paying a lender more up front in the form of prepaid interest called “points.” Or you can take lender “credits” to lower your closing costs, in exchange for a higher rate.
Learn About Locking A Rate
Since interest rates can fluctuate daily based on how the market is doing, locking your rate protects you from these fluctuations going forward. When you lock your rate, your lender will commit to honoring that day’s rate options, even if rates go up later. Locking your rate is the first step to starting the loan process. You can lock your rate once a loan estimate has been delivered and accepted and through our Rate-Lock-Guarantee you can lock in your rate even before having a signed purchase contract. This benefit offers a great piece of mind and the confidence to continue your home shopping all while having your low-low interest rate locked in.
Locking a rate may seem final, but there are still quite a few things you can do once you’ve locked, such as changing your loan type, choosing to pay points or take credits, making changes to your application, or taking advantage of market changes (this is sometimes called a “float down” option).