Beware of Rate Shopping!
Posted on | February 6, 2009 | No Comments
For those of you that are shopping for the best rate available, beware of the rate and switch! What I am talking about is the total overall cost of the loan. Make sure when you get a Good Faith Estimate you are not just looking at the rate and the payment, which is what you have been conditioned to look at over many years of advertising only rate and the reduced payment you will receive.
What you have to consider is the cost. In other words, how much is this loan costing you in the long term? If the cost of the loan that has a .250 rate difference is $5,000 higher than you will need to factor that into the equation. You may be better off paying a higher rate and saving the $5,000! This is especially true if you plan to sell the property within 5 to 7 years. Right now the majority of people sell their current property within 5 years. The current economy may be changing those numbers but for now it is what it is. You are the only one who can protect yourself so be aware of the cost of a loan when buying or refinancing.
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