Why do you offer so many different rates for each loan program?
We often offer a variety of interest rate choices for each loan program. This gives you the flexibility to choose the rate and points combination that is best for you. 1 point is equal to 1% of the loan amount. If you were borrowing $100,000, 1 point would be $1,000. The points listed on this site are inclusive of our origination fee and discount points (often these are listed as two separate items, but on this site they are combined for simplicity).

If we charge you more points upfront we can usually offer you a lower rate. On the other hand by charging you a higher rate we can offer to charge you less points.

What rate is best for me?
The answer depends on how long you plan to keep the loan. (Usually this is how long you plan to keep the home, but if you plan to refinance in a short period of time then the time you plan to keep the loan would be shorter than the time you plan to keep the home.)

You can decide which option is best for you by dividing the monthly savings that you receive by getting the lower rate, by the extra cost of the points associated with that lower rate.

For example: Assume that you are borrowing $100,000 with a 30 Year Fixed Rate Mortgage. You have two rate options: Option #1 has a rate of 8.250% and 1.000 points and Option #2 has a rate of 8.000% with 2.000 points. Your payments and costs would therefore look like this:

Option 1:
Payment: $751
Points: $1,000

Option 2:
Payment: $733
Points: $2,000

As you can see you will save $18 a month with option #2, but it will cost you $1,000 more upfront. By dividing $1,000 by $18 we can determine that we would have to keep this loan for at least 55 months in order to make it economical to pay the points and thus get the lower rate.

Bottom line: If you won't be keeping the loan long enough to recoup the cost of the upfront points in the form of lower monthly payments then choose the higher rate without points. Usually, if you plan to be in the house for less than five years you will want to keep points to a minimum, but you can do this simple calculation to decide for sure.

What does it mean when I see negative points such as
-1.000%?
This means that not only will we not charge you any points, we may be able to give you a credit to offset some of your other closing costs. For example on a $100,000 loan amount with -1.000% points you would pay no points and get a $1,000 credit towards other costs such as appraisals, etc. Be aware however that the credit can never exceed the total amount of "allowable lender paid costs." In other words, if the credit exceeds your closing costs the extra amount can't go towards your down payment. The credit cannot usually be used to pay prepaid items or escrow deposits, either.

Loans with negative points (a credit) are often called "low cost" or "no cost" loans. They are especially popular for refinancing.

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