The process of buying your first home involves a steep learning curve. From how to get started to understanding the roles of the various players in the process, it can be confusing.
Probably the most misunderstood aspect of the home buying process is the mortgage. Sadly, it’s also the most important. We see far too many real estate consumers who, in their haste to get it over with and get on with house hunting, don’t pay attention to exactly how much the loan will cost.
We don’t want this to happen to you, so let’s take a look at how to avoid overpaying for your home loan.
1: Dig deeper than the loan’s interest rate
When comparing home loans, most inexperienced homebuyers use the interest rate as a benchmark. Why not? It’s what the media focuses on and what lenders advertise.
But which interest rate are they talking about? There are two that you need to consider when shopping for a loan.
The advertised rate is typically what you’ll see first, with the APR, or annual percentage rate, located in the fine print. Because it represents the total cost of the loan, including points, fees and other loan costs, it’s the APR that you want to compare across loan offers.
Learn more about this by visiting the Consumer Financial Protection Bureau’s website.
What are points?
As you learn more about the mortgage process you’ll hear a lot about “points.” There are two types that you need to pay attention to: origination and discount points.
Origination points are often referred to as “origination fees” and it’s what the lender charges for its services. These are negotiable and represent yet another way to save money on your home loan.
Discount points, on the other hand, offer a way to “buy down” your interest rate. Each point is worth 1 percent of the loan amount. For example, for a $200,000 mortgage, one discount point equals $2,000.
And, each point that you purchase will lower your rate “from one-eighth to one-quarter of a percentage point,” according to Dona DeZube at interest.com.
When comparing loans, ensure that you are comparing “offers that include points to those that don’t and determine how much you’re really saving by paying thousands of extra dollars up front,” cautions DeZube.
To simplify the process, request that each lender put the loan’s points in dollars instead of percentages, according to the Federal Trade Commission. Not only does this help you compare loans, but it helps you understand the total cost.
2: Lock your Rate
Just as a loan pre-approval isn’t binding on the lender, neither is the interest rate offered. If you like the rate, lock it in. Rate locks typically last for 30 days but the costs depend on the number of days.
When comparing loans, ensure that you compare quotes with the same rate lock period.
Should you decide to lock your rate, ensure that it clearly states not only the length of the lock period, but the interest rate and number of points as well.
Your mortgage payment will likely become the largest check you write each month, so take all the time you need to ensure that you’re saving the most money possible.
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Introduction to Jennifer Y. Ross & The Westchester Living Team at COMPASS
Jennifer comes from Platinum Drive to Compass as an experienced agent. She epitomized Platinum Drive Realty’s motto “I grew up here. I live here. I sell homes here” and she is known for providing each of her clients with an exceptional experience guided by her expert local knowledge. She works tirelessly to ensure each of her clients has a professional, enjoyable and successful Westchester community & home buying search or selling experience. She often remains very friendly with her clients and welcomes the opportunity to be an ongoing resource as they settle into Westchester Living. Every step she takes will embody her core principals; integrity can never be compromised, clients’ interests always come first and character, commitment, and passion truly matter. For her buyer clients, Jennifer looks forward to the opportunity of being “Your NYC to Westchester” guide and real estate broker. For her seller clients, Jennifer is proficient at implementing an aggressive marketing strategy in order to obtain the best price possible in a highly efficient and seamless manner. Jennifer thoroughly enjoys assisting buyer clients in navigating the landscape of the Westchester residential real estate market. She is skilled at enabling clients to define where they see opportunity & facilitating the process from initial search through closing. Jennifer was awarded the Platinum Drive Star Award for Outstanding Performance in Sales & Client Services in 2014 & Platinum Drive Realty’s Superstar Award for Excellence in Sales and Client Services 2015 & 2016 for her outstanding performance in sales and client service. In addition to her passion for local real estate, Jennifer has a firsthand understanding of home renovation and new construction. Upon moving from NYC to Scarsdale, she and her husband performed an extensive renovation on their first home. After completion, they moved onto their second project in Larchmont, a full house renovation and expansion. More recently she is active with local developers who specialize in new home construction, home expansions and renovations. Jennifer has the ability to understand a home’s full potential and can help clients find or create their dream home. Jennifer was the Manager of Platinum Drive Realty’s Larchmont Office. Jennifer was raised in Scarsdale. After graduating from Scarsdale High School, Jennifer received a BA in Child Study & Sociology from Tufts University and an MA in Language & Literacy from New York University. Jennifer currently lives in Larchmont with her husband, Michael, and their three sons, Braden, Devon & Zane. She specializes in communities in Southern Westchester with a concentrated focus on the Sound Shore Communities of Larchmont, Mamaroneck, Rye Neck, Rye, New Rochelle as well as her hometown of Scarsdale. Prior to real estate, Jennifer was a teacher in the Mamaroneck Public Schools. Jennifer has a deep understanding of the local school systems and the needs of young families.
Professional Associations & Accreditation
Jennifer is a Licensed Associate Real Estate Broker & has her Accredited Buyer Representative designation (ABR) and her Seller Representative Specialist designation (SRS). Jennifer is a member of the Hudson Gateway Association of Realtors & the National Association of Realtors. Jennifer’s
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Jennifer’s Instagram: instagram.com/TheWestchesterLivingTeam
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