Nobody likes to part with their hard-earned money. Some borrowers are surprised, or even offended, to learn how much a lender makes from their mortgage. After all, that is ultimately money out of the borrower’s pocket! Is it possible to find a lender who takes a lower cut for their services?
It might be possible, but at MortgageDepot, we encourage our clients to look at the bigger picture. There is much more to a mortgage than lender profits. In fact, a lender who charges higher fees compared to others might still offer the best deal! To help you grasp this concept, today we will discuss the basics of structuring a mortgage in which everyone comes out on top.
Mortgage Rate vs. Mortgage APR: Understanding Your Lender’s Profits
To speak knowledgeably about lender profits, you must first understand the difference between your mortgage rate and your mortgage APR. Here is a quick rundown:
- The mortgage rate is the interest rate associated with your loan. This amount is added to your principal to arrive at your monthly payment.
- The mortgage APR is your interest rate plus other fees associated with your loan, such as underwriting, loan origination costs, mortgage points, and other applicable fees.
Three Key Steps To Finding a Fair Mortgage
Not all mortgages are created equally. Here are three steps you and your mortgage broker can take to ensure that you receive the best program for your needs:
- Shop around: Just like cars, televisions, and other material items, when it comes to mortgages, you need to do a little shopping to get the best deal. As you compare mortgage products, consider the mortgage APR for each one, which will include lender fees.
- Negotiate: Partner with a mortgage broker who isn’t afraid to strike up a deal with lenders. They might even be able to score you a reduction in lender fees, leading to a lower mortgage APR!
- Be flexible: As you, your mortgage broker, and the lender put together your loan program, don’t zero in on lender fees. Look at your interest rate, loan term, and other factors that could affect how much you’ll pay over time.
Contact Us Today!
When you apply for a mortgage, you deserve to know where your money is going. Contact us today to learn more about lender fees and how they affect your loan!
Connect with one of our loan consultants for more information.