Understanding Mortgage Interest Rates to Avoid Mortgage Fraud

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UNDERSTANDING MORTGAGE INTEREST RATES
One of the most confusing and overlooked areas of buying a house is understanding the interest rate you are paying on your mortgage. The reason for this is that buyers do not spend time checking the interest rate quote or obtaining multiple mortgage rates from banks and brokers. Many buyers in this market assume because they have a great credit rating and high FICO score that their mortgage broker or bank will automatically give them the lowest rate possible. Unfortunately, this is rarely ever the case. When you are purchasing a house or refinancing you must remember “Caveat Emptor”, buyer beware.
👉How to Obtain the Best Rate
📌Ideally keep the total mortgage, homeowners’ insurance, and property taxes under 32% of your monthly income. However, depending on your other debt some mortgage companies let you go closer to 50%.
📌Put down 20% to avoid Private Mortgage Insurance “PMI”
📌Determine what type of loan you can afford. With today’s low rates it is hard to think of a reason why someone would finance with anything other than a fixed rate loan over a term of 15, 20 or 30 years.
📌Most mortgage rates can be calculated based on the 10-year treasury rate. The bank determines what the 10-year treasury rate is and then calculates cost and profit above that rate to price their mortgages. A rule of thumb is a 30-year fixed-rate mortgage should be anywhere from 150 to 200 basis points above the 10-year treasury rate.
See this link for more info: www.federalreserve.gov/releas...
📌 Check mortgage rates here:
www.bankrate.com/mortgages/
📌The interest rate on your loan (in nominal terms) is the rate used to calculate your monthly payments.
📌The Annual Percentage Rate “APR” is the true rate including all the costs and fees, such as broker fees, origination fees and other expenses.
📌When comparing loans, compare the APR rate and calculate using 15 year, to 20 year to 30 year mortgages.
📌Be aware of unscrupulous banks and mortgage companies changing the terms of your original loan at closing. There has been a tremendous amount of fraud in this area in the last 20 years; especially back in the early 2000’s.
👉 For more information contact me below or visit our website: www.rabcpafirm.com/contact/?u...
Robert A. Bonavito, CPA
1812 Front St.
Scotch Plains, NJ 07076
908-322-7719

Пікірлер: 4

@bobanderson6656 2 жыл бұрын

Understanding the APR is key. Also, don't buy a too expensive house. 2008 saw a lot of people with higher mortgages than they could afford. Realtors ARE NOT your friends. They are all about maximizing the cost of the transaction. Trust them less than a used car salesman. (My apologies to the used car salesmen.)

@Rabcpafirm 2 жыл бұрын

Thanks for the comment Bob

@bryannn1998 2 жыл бұрын

Hey, excellent video! I have 2 questions… (1) The Interest rate one is paying for the loan is linked to the 10-Year treasury Yield and the banks spread is 100-200 Basis points. So let’s say that the 10-Year is at 1.5% the (MAX) one should pay would be 3.5% interest on the loan? (2) The APR however is where I got a bit confused, the APR would always be higher because that’s where your paying the ¿Nominal? Interest rates which include the normal rate + the spread the banks make 100-200 basis points + the fees one has to pay to the brokers or to the people involved in the transaction and what not? Let’s say you purchased a $100,000 house with 20% downpayment. Your loan Amount is $80,000 and the 10-year yield is 1.5%. You should be paying in the range of 3.5% in interest rates. The APR should be how much in a scale of min-max? At the end of the 30-years that $80,000 loan ended up being roughly $50,000 in interest at the end of the 30-year term? Also, does ones interest payment get reduced as years go by because the outstanding balance on your loan is decreasing or do you pay a fixed 3.5% interest on $80,000 every year until the loan is paid off? Thank you for helping us out!

@Rabcpafirm 2 жыл бұрын

The interest-rate is the stated rate. The stated rate is used to calculate your interest on the loan and reduces your principal balance every time you make a payment