Using Bankrate.com

[Raybyrnes]

HLS

I scroll through bankrate.com from time to time just to get an idea of the mortgage market. I completely understand that each lending institiution is posting their most competitive rate based on a fairly strict guideline that the majority of people will not qualify for.

Here is a question that you might be able to shed ligt on. When looking at 2, 0 point loans how is one lender able to charge higher fees in the APR while providing a lower overall apr and lower payment

Using 400 K 30Year Fixed Rate Loan

For Instance NationsChoice Mortgage 10/15 APR 5.845 Point 0 Rate 5.625 Fees in Apr 9859 Est Payment 2303
vs American Interbank Mortgae 10/15 APR 5.959 Point 0 Rate 5.75 Fe3es in APR 8959 payment 2334.

Just trying to get a better understanding of the mechanics of the Loan

[scott]

The key to the two examples you gave is the difference in the Rate.
The APR is based on the Rate plus the Fees in APR.
The Est. Payment is based solely on the Rate.
So because the rate is significantly lower from NationsChoice, the APR and Est. Payment are both lower.
If NationsChoice’s fees were a lot higher than American, they could push the APR higher than American, but the Est. Payment would still be lower.
If anyone has any information/experience about the criteria necessary to obtain one of these loans, I would love to hear about it. I am wary of the companies that list mortgages on bankrate.

[scott]

The key to the two examples you gave is the difference in the Rate.
The APR is based on the Rate plus the Fees in APR.
The Est. Payment is based solely on the Rate.
So because the rate is significantly lower from NationsChoice, the APR and Est. Payment are both lower.
If NationsChoice’s fees were a lot higher than American, they could push the APR higher than American, but the Est. Payment would still be lower.
If anyone has any information/experience about the criteria necessary to obtain one of these loans, I would love to hear about it. I am wary of the companies that list mortgages on bankrate.

[HLS]

Ray….
SCOTT has the quick answer. I hope that makes sense.
Does it answer your question ?

Your actual payment is based on your RATE.
The APR factors in the allowed fees that get financed.

When you have fees and finance them into the loan amount, your actual home loan is a lower amount and then you are financing fees.

A no point loan is NOT a no cost loan. A low rate can be made up for in higher fees, but not called points.
It’s semantics.

That low rate is low. Seems too low… The par rate (zero points) that I had today (for $400K) was 5.98% with $9000 in fees or 6.125% with $6500. At 6.375% Fees of $2500… A “no cost” loan would be 6.50% with an APR of 6.50%

Fees include origination, lender underwriting, title & escrow, etc.

I have no idea what one needs to qualify with them.
At 6.125% PAR today I wouldn’t make a penny without charging a fee.

I am cheaper than the big names, I think. The big names still get most of the business.

Some people get great loans, some people think that they get great loans, and a whole lotta people have been screwed on loans, and continue to fall for tricks.

It’s all a matter of QUALIFYING. I hear about bait and switch from others all the time, and some crazy fees being charged.
Although quoted a low rate, they have you submit everything and pay for an appraisal or application fee, THEN tell you that you don’t qualify for that lowest rate.

It happens all the time. It’s very difficult to shop by rate alone. Maybe some have had good experiences.

Most people just don’t understand the tiny things that can go wrong before a loan closes, due to lender underwriter, doc drawer or funder. They can get REALLY picky sometimes.

As in most businesses, nobody can claim to be cheapest all the time, and plenty of expensive ones stay in business by not being cheap but giving good service etc.

If you had a 6% loan and paid all fees in cash,
OR
had a true no cost loan, your Rate AND APR would be 6%…

With a true “no cost” loan, the Rate and APR should be exactly the same if all “APR allowed” fees are actually included. There could still be other “non APR” fees. No cost loans are often misleading.

There is a lot of confusion about APR’s.

Generally, the following ARE allowed to be included when when financed to figure the APR:
Origination Fees/Points
Discount Points
Processing
Underwriting
Tax Fees (not property tax)
Flood
Prepaid Interest
Escrow Fees
**********************
What is usually NOT included in the APR figure, even when financed is:
Credit Report
Appraisal
Title Insurance
Recording
Hazard Insurance or Impound
Property Taxes or Impound

[HLS]

Ray….
SCOTT has the quick answer. I hope that makes sense.
Does it answer your question ?

Your actual payment is based on your RATE.
The APR factors in the allowed fees that get financed.

When you have fees and finance them into the loan amount, your actual home loan is a lower amount and then you are financing fees.

A no point loan is NOT a no cost loan. A low rate can be made up for in higher fees, but not called points.
It’s semantics.

That low rate is low. Seems too low… The par rate (zero points) that I had today (for $400K) was 5.98% with $9000 in fees or 6.125% with $6500. At 6.375% Fees of $2500… A “no cost” loan would be 6.50% with an APR of 6.50%

Fees include origination, lender underwriting, title & escrow, etc.

I have no idea what one needs to qualify with them.
At 6.125% PAR today I wouldn’t make a penny without charging a fee.

I am cheaper than the big names, I think. The big names still get most of the business.

Some people get great loans, some people think that they get great loans, and a whole lotta people have been screwed on loans, and continue to fall for tricks.

It’s all a matter of QUALIFYING. I hear about bait and switch from others all the time, and some crazy fees being charged.
Although quoted a low rate, they have you submit everything and pay for an appraisal or application fee, THEN tell you that you don’t qualify for that lowest rate.

It happens all the time. It’s very difficult to shop by rate alone. Maybe some have had good experiences.

Most people just don’t understand the tiny things that can go wrong before a loan closes, due to lender underwriter, doc drawer or funder. They can get REALLY picky sometimes.

As in most businesses, nobody can claim to be cheapest all the time, and plenty of expensive ones stay in business by not being cheap but giving good service etc.

If you had a 6% loan and paid all fees in cash,
OR
had a true no cost loan, your Rate AND APR would be 6%…

With a true “no cost” loan, the Rate and APR should be exactly the same if all “APR allowed” fees are actually included. There could still be other “non APR” fees. No cost loans are often misleading.

There is a lot of confusion about APR’s.

Generally, the following ARE allowed to be included when when financed to figure the APR:
Origination Fees/Points
Discount Points
Processing
Underwriting
Tax Fees (not property tax)
Flood
Prepaid Interest
Escrow Fees
**********************
What is usually NOT included in the APR figure, even when financed is:
Credit Report
Appraisal
Title Insurance
Recording
Hazard Insurance or Impound
Property Taxes or Impound

[HLS]

RAYB

[HLS]

RAYB

[Author]

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