All Posts Tagged With: "par"
Should Government Set Mortgage Rates?
With all the talk of getting a new mortgage there’s one question which no one seems ready to touch: Why doesn’t the government ought to set mortgage rates? At first this may seem like an audacious idea, a violation somehow of the free market absolutism preferred by so many businesses and industries — at least [...]
26Sep2011 | Peter G. Miller | 0 comments | Continued
Should I Pay More Points For A Lower Mortgage Rate?
The answer most often given no doubt looks at current mortgage rates and while interest is a big part of the answer, it’s not the only cost paid by borrowers. There is also an origination fee and, often, also one or more points. The origination fee is a charge to compensate the lender for his [...]
6Jun2011 | Peter G. Miller | 0 comments | Continued
Google Mortgage Ads — Do They Reduce Borrower Costs?
Several months ago Google began offering a new service for advertisers, an ability to post comparison ads. You can see this today with mortgages — just go to: Conventional Mortgages FHA Mortgages Jumbo Mortgages VA Mortgages Go to any of these links and you’ll see that Google generates a search for the type of mortgage [...]
3May2010 | Peter G. Miller | 0 comments | Continued
Interest Rates Rise Suddenly, Say Mortgage Bankers
The Mortgage Bankers association is reporting that mortgage rates moved up sharply during the past week. ___ “The average contract interest rate for 30-year fixed-rate mortgages increased to 5.25 percent from 4.81 percent, with points decreasing to 1.02 from 1.28 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The 44 basis point [...]
3Jun2009 | Peter G. Miller | 0 comments | Continued
What’s The “APR?”
The Annual Percentage Rate (APR) represents most — but not all — of the costs that will be charged over the projected life of a loan, costs such as interest and points. One catch is that loans do not normally last as long as projected. As an example, when points are paid, they are undervalued [...]
1Sep2008 | Peter G. Miller | 0 comments | Continued
What’s A Mortgage “Point?”
A “point” or “loan discount fee” is equal to 1 percent of the loan amount. For example, if you are borrowing $100,000, you would pay $1,000 per point, or $2,000 for 2 points. This money must be paid or credited at closing. In general terms, more points mean a lower interest rate, fewer points can [...]
28Aug2008 | Peter G. Miller | 0 comments | Continued
What is “par” pricing?
With par pricing, the lender will quote a rate with zero points. Instead of, say, “6.5 percent plus 2 points” you might get a quote of “7.00 percent plus 0 points.” The reason that interest at par is higher than interest with points is that points are merely a form of prepaid interest. If you [...]
28Aug2008 | Peter G. Miller | 0 comments | Continued
How many points must one pay to reduce an interest rate 1 percentage point?
It’s generally agreed that one point paid at closing is equal to 1/8th of a percent in interest over the life of a 30-year mortgage. To obtain a one percent interest rate reduction some would thus argue — incorrectly — that a borrower must pay 8 points up front. Why is this argument incorrect? Because [...]
27Aug2008 | Peter G. Miller | 0 comments | Continued
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