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Loan Origination Fees Vs Discount Points

When taking out a mortgage, you probably were considering buying discount points whether for a new purchase or to refinance an existing loan, one decision you’ll undoubtedly will have, is to   make sure it’s worth paying discount points to obtain a certain interest rate on your mortgage.

Before going any further, it’s important to note that the term “points” gets thrown around loosely, and can refer to the loan origination fee and/or discount points. The loan origination fee is the commission charged by the bank or the loan officer for working on your loan, where on the other hand discount points are used to buy down your interest rate.

It’s an important distinction because the loan origination fee pays for the costs of originating the mortgage and these fees involves:

  • Paperwork
  • Verification’s
  • Calculations done to determine your mortgage rate

Finally, it is important to know that a good credit score may help you get a lower origination fee, and an excellent credit score can be an even better bargaining tool in your negotiations.

While paying discount points (prepaid interest) is entirely optional depending on the rate you desire. Discount points are a one-time, upfront mortgage closing cost which give a mortgage borrower access to “discounted” mortgage rates as compared to the market.  

We at Home Loans On Demand are devoted to your real estate financing needs as we partner to assure you receive only the best home-loan solution specifically suited to your financing and lifestyle needs

FHA, Home Loans, Loans, Mortgage, Rates, Refinance

What Are Today’s Mortgage Rates?

Today’s mortgage rates are probably lower than they’ll be at the end of 2017, per most experts.   However, your actual mortgage quotes depend on several factors — like your credit rating, loan amount, and how you intend to use the property.   Advertised rates can’t consider these factors and are not as accurate as custom quotes that you get by contacting mortgage lenders.

Whether you are purchasing your dream home, refinancing an outstanding loan, or consolidating debt, our highly-experienced team can help you find the right loan program.  

Call us today @ 714-493-2657

Home Loans, Loan Origination, Loans, Mortgage, Rates, Refinance

why refinance your home

By, home loans on demand

Because refinancing with a new loan can bring you many options and benefits. However, make sure you understand why refinancing your home will be a solution that  will actually benefit your unique situation such as:

lowering your monthly payments

refinancing at the right time especially when interest rates drop one percent or more lower than your current mortgage interest rate can make a notable difference in your monthly cash flow.

refinancing may shorten your repayment period but increase your monthly payments: You may find it’s a worthy tradeoff to make higher monthly payments in order to own your home sooner, especially if interest rates are favorable to you. Your personal financial situation and long-term goals will help determine the right move.

refinancing to obtain cash: Cash out refinancing allows you to get an additional lump sum of cash right away to use for major purchases, including home improvements, automobiles, vacations or weddings. However, you should compare the benefits of refinancing to other methods, including home equity loans – especially if you don’t need a large amount.

it is important to consider the following:

know what you owe: determine the payoff amount on your existing mortgage to know how much you will need to borrow from a new loan. Also, find out if your current lender charges any fees or penalties for paying your entire mortgage before it’s due (called prepayment)

you have options: there are numerous loan options out there for your home, ranging from loans that give you a more stable interest rate to those that help consolidate your debt. Work with a lender to determine if any option benefits you more than your current mortgage loan.

refinancing will include closing costs:  you will need to go through another property appraisal, as well as provide essential documents  which will vary based upon your location and loan option. Closing costs are also involved.

 

you have time to change your mind: By law, you have three business days after you sign your loan contract to cancel the loan for any reason. For this same reason, you do not receive any money until three days after signing the contract. This applies to primary residences only.