When it comes to buying or refinancing a home, there are various options available in the market. These options include interest rates, origination fees, and discounting. However, evaluating each transaction can be overwhelming. Don’t worry, at Oriental, we’re here to help!
Evaluating origination and discount expenses:
What should you keep in mind?
When evaluating a mortgage offer, it is crucial to consider origination and discount expenses. Sometimes, the expenses required to obtain a lower interest rate may not have a significant impact on the monthly payment, but they can deplete your available funds at closing. The basic rule is to calculate how long it would take to recover the money you contribute on the first day compared to the savings in the monthly payment offered by the interest rate. If those expenses are recovered in one, two, or three years, then opting for a lower rate might be a good decision. However, it is important to note the difference and the ability to include these expenses in the mortgage amount.
Can origination and discount fees be included in the same mortgage transaction?
When evaluating a mortgage offer, it is crucial to consider origination and discount expenses. Sometimes, the expenses required to obtain a lower interest rate may not have a significant impact on the monthly payment, but they can deplete your available funds at closing. The basic rule is to calculate how long it would take to recover the money you contribute on the first day compared to the savings in the monthly payment offered by the interest rate. If those expenses are recovered in one, two, or three years, then opting for a lower rate might be a good decision. However, it is important to note the difference and the ability to include these expenses in the mortgage amount.
What should you know about a home purchase?
Generally, mortgage offers are usually similar regarding interest rates, origination, and discount expenses. In the case of a purchase, the amount to be financed is determined based on the sale price or appraisal price, whichever is lower. This means that you may need to provide an additional down payment or early payment, depending on the type of loan. In some cases, both the seller and the bank can cover part of these expenses, but this varies depending on the loan type and the requirements of each investor. The important thing is that, as a consumer, you orient yourself and evaluate all the available alternatives according to your needs.
Evaluating mortgage offers can be a complex task, but with the right information, you’ll be able to make clear financial decisions and achieve your home purchase or refinance goals.
Be sure to research, compare options, and seek professional advice to make an informed decision!
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