Consumption and Real Estate
Is there any quick and easy method to compare the closing costs of mortgage companies?
Question : Is there any quick and easy method to compare the closing costs of mortgage companies?
Have you used an online bank for your mortgage?
compare mortgages
Best answer:
Answer by wknightf3
Ask them. Otherwise there isn’t one I know of.
Also where a majority of closing cost are the same regardless of the company (i.e. taxes, lawyer fees, other gov’t charges), you may also pay fees consider “outside of closing”, which are the profit the loan office made, based on the loan he/she sold you.
The simplest way is to look at the “APR,” which is the “annual percentage rate” that federal requires lenders to disclosed to consumers. The APR is a “common denominator” for comparing interest rates.
Another way is by using a spreadsheet. use the “pmt” function.
Place the interest rate in one cell, the amount being borrowed in another cell, the closing costs in another cell, the number of years of the loan in another cell.
The pmt function calculates the payment. Enter in the data, use the pmt function and apply the cells in the proper place. Once done, the pmt function should yield the correct monthly payment. Once this is done, you are ready to calculate the “real” interest rage:
To calculate the “real” interest rate, simply subtract the closing costs form the amount being borrowed, and then change the interest rate until you get to the correct payment amount.
Note: If you enter the interest rate as 6.7 the divide that number by 1200 to get the monthly interest rate, multiply the years by 12 to get the correct number of months.
Note: Some interest rates are compounded monthly, others daily. That can have a profound effect on the “real” interest rate.
Closing costs and points are just a trick lenders use to have their interest rates look lower. They just reduce the amount being borrowed. Impound accounts are exactly the same.
Good Luck