My first Post. Would appreciate any feedback. What is my Interest Rate?
For the past 27 years we have helped thousands of home buyers just like you get their questions answered. Our #1 objective is to help you get your best mortgage interest rate and to make sure your mortgage is structure to help you meet your goals and objectives. Too many people pay more than they should for their mortgage because the lender didn't take the time to understand their unique situation. At JTS & Co. we help you get the best loan for your needs, so you're set up for long-term financial success.
SHOULDN'T THE INTEREST RATE BE MY MAIN FOCUS
Interest rate seems to be the primary focus when considering a mortgage or any long-term financing option. While it is important it is not always the most important. Nevertheless, this is where the mortgage industry through advertising and marketing has led the borrower to focus. If you call up any lender and ask them what their mortgage interest rate is they will gladly quote you the lowest rate available. But the lowest rate may not be your best option. I know that sounds wrong but, in this article, I will endeavor to explain and hopefully give you a better understanding of what goes into your mortgage interest rate.
WHAT DETERMINES WHAT INTEREST RATE I WILL GET
The first thing to know is that in today's world there are many factors that go into your specific interest rate. The type of mortgage loan you are getting (conventional, FHA, VA or USDA or Non QM), the term of the loan, how much you are borrowing relative to the purchase price or appraised value (otherwise known as LTV or loan to value), your credit score, your loan size, your loan purpose (purchase, refinance, or cash out refinance, construction), your occupancy status, how long you want to lock in your interest rate; all of these questions have to be addressed when determining your interest rate. In addition, the timing of the mortgage markets otherwise known as bond markets play a part in your interest rate.
Therefore, if you call up any lender and ask them what the interest rate is and if they give you a quote without asking you any questions this should be an area of concern. There is no way to know what your specific interest rate is without talking specifics. It is so important to sit down with a trusted adviser when you begin the homeownership journey. Whether you are purchasing a home for the first time or if it is your third or fourth time, or if you are refinancing your existing mortgage talking with someone you trust and that will take the time to explain your specific information is something you deserve.
This article was started with the statement "the lowest rate may not be your best option." The lowest rate comes with a cost in the form of discount points. Discount points is a charge to buy down your interest rate below what is called the par rate. The par rate is the rate your lender can offer you without any additional charges. Discount points is a percentage charge of your loan amount to buy down the rate below par. Typically discount points are 1% of the loan amount although they can come in 1/8% increments. For example, if you were borrowing $200,000 a 1% discount point would be $2000 in additional closing cost. The lowest rate may cost 2, 3 or even 4% in discount points. But want the lower interest rate save me in the long term? That depends. When considering discount points, you have to take into account how long do you anticipate remaining in this mortgage? In the mortgage industry we know that the average mortgage only remains on the books 5-7 years. Borrowers either sell the home or refinance it into another mortgage. For many buying a home is for a short duration due to job expectations, growing family size etc. Therefore, if 1% cost $2,000 to buy down your interest rate by 0.5% and you saved approximately $65 per month your break-even would be 31 months. Thus, if you plan to remain in the home for 3-5 years then the additional cost to buy down the rate may not be justified. If you are planning to remain in the home for a longer period of time, then it may be worth it. Again, working with a trusted adviser that understands your goals can help you structure your loan and get you your best mortgage rate.
Another reason that the lowest mortgage rate may not be your best solution is in terms of cash to close. When you close on a mortgage transaction in particular a home purchase you have out of pocket expenses in addition to your down payment, called closing cost and pre-paid's. These closing cost include items such as appraisal fees, underwriting, attorney fees etc. and they can add up quickly. Pre-paid's are charges to pre-pay your homeowner's insurance for the first year and to establish your escrow account for future payment of insurance and property taxes. You can usually estimate 2-5% of the loan amount. While the seller in many cases is willing to pay these to sell their home that is not always the case. So, in addition to your down payment, if you have one, you may have to come out of pocket to pay the closing cost and pre-paid items. This is where your mortgage interest rate can become a tool to help you become a homeowner. If you are short on funds to close many lenders offer a lender credit to help offset some if not all of these charges. The higher the interest rate the more lender credit that can be provided. Just as in the case of discount points as you move up in interest rate the yiled associated with that interest rate increases. Your lender may be able to offer you a 1% or 2% credit. Again, assuming a $200,000 loan 1% would give you $2000 to help pay your closing cost and pre-paid items. 2% would give you $4,000. The higher interest rate would cost you more than the $2000 you recieved in a lender credit so again you have to consider your goals, objectives and present circumstances to determine what is best for you. Assuming that the average mortgage gets refinanced or sold in 5-7 years the higher rate may not be as big a factor. If you use the same $65 difference over 48 months (4 years) the additional $65 higher payment would cost, you $3,120 and after 30 months it's costing you in terms of monthly interest cost. If you were able to get 2% or $4,000 credit you have approximately 60 months to work with. In either case if interest rates were to improve you could consider a refinance option to bring the rate and the long-term interest cost down.
Your best mortgage interest rate can be a tool to help you accomplish your goals. I am firm believer in working with someone you can trust and who will listen to your goals and concerns. There are a lot of ways to structure your mortgage. Having options and understanding those options will set you up for long term success. When it comes to your mortgage don't just accept the "lowest rate" it just may not be in your best mortgage interest rate.
One last thought when it comes to your best interest rate as you shop around. Its almost impossible to compare apples to apples. What I mean by that is that unless you get a quote from different lenders at the same time, the same day, with the same construct you are going to get different answers. The reason for that is that the mortgage market is a continuous state of flux. The bond market which is what drives mortgage rates can change two, three, four or more times in a given day. So, if oyu get a quote from one lender at 10 and then you call another that afternoon or the next day you are not goign to be comparing apples to apples. Again, and I can not stress this enough, when it comes to a mortgage having someone you can trust advising you is some important. The long term implications are too great
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That is so amazing! Let us know how it goes. Looking forward to hear about it!!
Hey Evelyn Gascoyne! I will make some assumptions here - tell me if I'm off base with any of them. When you say content lead time, you're referring to how long it takes an article to be written (from ideation to hitting the publish button).2. When you say backlog, you're referring to a bank of publish-ready articles that are scheduled to be published in the future (from here on out I'll refer to this as a 'publishable article backlog')With those assumptions ^ in mind, here are some thoughts.First, make sure your article content calendar is planned out for at least 90 days in the future. That visibility into what you're working on is critical to building a backlog and helping you plan for articles. I'd recommend having a 2-3 week, or 6-9 articles, publishable article backlog. This shouldn't be viewed as a saving account to dip into when content gets low. Instead, follow the FIFO method so the first article to go into the backlog will get scheduled to be published first. As a second article goes into the backlog, it will have the place of the next scheduled article.Every week you should have time allocated to 3 tasks (for 3 articles). Follow the rule of 3-3-3 every week Publish 3 articles from the backlog Edit and finish 3 articles and add them to your backlog Start researching and drafting 3 new articles In general, you should follow this process to create an article. As a writer, you'll be playing an active role in the research and planning phase, the SME interview phase, the first draft phase, the revisions phase, and the publishing phase. Others in your organization will play an active role in the review and final approval stages. Following this process means it'll take around 8-10 business days to go from ideation to publishing an article. That doesn't mean it'll wholly consume 8 hours per day for 8-10 business days, but the big picture that's how many days you can expect the process to take. Below is an idea of how long each part of the content creation process should take by the number of hours. Researching & Planning - 2 hours SME Interviews - 2 hours Initial Draft - 2-4 hours Internal Review - 1 hour IMPACT Review (if working with IMPACT) - 1 hour Revisions - 1 hour Final Approval - 1 hour Publishing - 1 hour Now, if you're trying to implement this and you can't break through you have a couple of options to build a backlog.Pause for 2-3 weeks on publishing to build your backlog.2. Scale back on publishing. Take 1-2 (of your 3 published articles per week) to put in your backlog.3. Use others in your organization to write content while you're focused on 3 articles per week and use the surplus to build a backlog.
They do, thank you! The Berry Insurance site is also very helpful!
Sounds like a plan Dave Wieser ! Looking forward to hearing back :) Also, want to tag in Renee Hernandez who helped build some pretty awesome stuff with our quiz functionality in IMPACT+.
One thing that helped us get on track was Trello. We can see what stage every idea is in, who still needs to give impute, approve, what needs work, and so on.
Hi, Shanequa Jones ! You're definitely going to want to rewrite those sections to be more original in order to help those pages rank in organic search. They consider duplicate content to be a poor user experience. Google also has very specific recommendations around when duplicate content is and isn't okay (very similar product pages, etc) and how to help them understand what is the canonical version of a page. Here's their writeup on the topic: https://developers.google.com/search/docs/advanced/guidelines/duplicate-content