How to Handle Those Mortgage Rate Add-Ons
NEW YORK ( TheStreet) -- With the Federal Reserve's decision last week to stay the course on its low-rate policy, mortgage rates have been drifting down. But they remain a good deal higher than they were last spring, and you might end up paying a good deal more than the rate you see advertised.
How come? Advertised rates usually involve the best case -- the rate offered applicants with the highest credit ratings, buying homes in the best locations, and so on. Add-ons reflect higher risks associated with certain factors.
To find the rate you'll end up with, you'll have to talk to the lender, and perhaps fill out an application. But here, from The Mortgage Professor website, are a few examples of how add-ons can boost the rate.
Let's say you applied for a 30-year fixed-rate mortgage advertised at 4.375% for a $300,000 home with a 15% down payment.cash-out refinance, rather than a no-cash refinance, you'd also pay an additional 0.401%. For a loan on a condo rather than a single-family home, you'd pay an extra 0.1%. For an investment property rather than a primary residence, the rate would go up a full 0.502%. And opting for a 60-day lock-in period on the rate, rather than 30 days, would boost the rate by 0.033%. If you were unfortunate enough to have all these add-ons, your rate would be 5.863%, not 4.375%. rejected, try this tool on Guttentag's site.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV