All Posts Tagged With: "par"
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 you want and that at [...]
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 increase [...]
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 if APR [...]
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 mean [...]
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 work [...]
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 [...]
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