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Q: What is a mortgage broker?
A: A mortgage
broker is a real estate finance professional who can assist borrowers in
obtaining financing from various lenders.
Q: Why go to a mortgage broker?
A: A mortgage
broker can offer competitive rates, better service, and fewer costs.
Because a broker deals with a variety of investors, locally and
nationally, they are able to provide a wide range of products to meet
almost anyone's needs.
Q: If mortgage brokers are middlemen
between you and the lender, how can they save you money?
A: Mortgage brokers
obtain wholesale rates, and then set their own retail prices. They are
independent contractors who are free to provide their own pricing. Since
mortgage brokers may use the same lenders, this in turn will create
competition, therefore you can save money.
Q: Why Do mortgage rates change?
A: Mortgage rates
tend to move in the same direction as interest rates. There are many different interest rates that affect
mortgage rates, but for the most part, interest rate movements are based
on supply and demand. If the demand for credit (loans) increases, so do
interest rates. This is because there are more buyers, so sellers can
command a better price, i.e. higher rates. When the economy is expanding
there is a higher demand for credit so rates move higher. So, good news
for the economy is actually bad news for interest rates.
Although mortgage rates tend to move in the same direction as interest
rates, actual mortgage rates are also based on supply and demand for
mortgages. The supply/demand equation for mortgage rates may be different
from the supply/demand equation for interest rates. This can result in
mortgage rates moving differently from other rates. For example, one
lender may be forced to close additional mortgages to meet a commitment
they have made. This results in them offering lower rates even though
interest rates may have moved up. This is one of the primary advantages
of working with a mortgage broker rather than a single lender. Since
mortgage brokers obtain their funds from a variety of sources, they allow
you to access to a large number of lenders and therefore, are more likely
to find a lower rate.
Q: What is an annual percentage rate
(APR)?
A: The annual
percentage rate (APR) is designed to measure the "true cost" of
a loan by incorporating some of the lender's fees. The Federal Truth
& Lending Law requires that whenever an interest rate is advertised,
that the APR is also stated. Some of these fees that are calculated into
the APR are as follows.
Fees in the APR include the following:
- Discount
Points
- Broker
Fee
- Origination
Fee
- Loan
Processing Fee
- Pre-paid
Interest
- Underwriting
Fee
- Commitment
Fee
- Document
Preparation Fee
- Private
Mortgage Insurance
- Loan
Application Fee
An Annual Percentage Rate (APR) is a good indication when comparing
prices, but the best indicator is obtaining a Good Faith Estimate from
each lender.
I would like to submit a
question to a mortgage planner at Pittsburgh Financial Network.
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