These two items are a big part of why we started Portland Loan Team. By eliminating staff and other fixed costs, we are able to offer much better rates and lower costs to our clients. These items also represent a large percentage of the questions we get asked about most often.
Interest rates: Average 30 year fixed mortgage rate 3.82%
(Mortgage Bankers Association Weekly Survey week ending 9/6/19)
Interest rates fluctuate up and down just like the stock market. Long term interest rates are NOT tied to the Federal Funds Rate that you hear about on the news. That is a short term interest rate associated with banks lending money to one another. It impacts things like credit card and auto loan interest rates, but has no direct link with mortgage rates. Mortgage interest rates are impacted more by where investors think the economy is going in general. When the economy is strong, interest rates are generally higher in order to attract investors. When the economy is faltering or we are in a recession, interest rates tend to fall as investors sell stocks and move money into the bond market.
Mortgage rates are also impacted by the fixed costs associated with the companies closing the loans. Companies with larger fixed costs (labor, buildings, advertising) tend to have higher rates. Companies with low overhead can sell loans at lower rates because they have less fixed costs to cover with their loans.
Think BIG banks versus a company like Portland Loan Team where we have no office and no staff. Just two loan officers/owners working directly with clients. We don’t need “economies of scale” because we operate very efficiently! As a result we can offer very low rates without any junk fees associated with processing and credit reports.
If you’re curious whether refinancing makes sense for you, I’m here to help! Give me a call or email and I’ll run the numbers for you.
There are two categories here: Closing costs and prepaids.
Closing costs: These include the following fees that are almost identical with any lender
- Title and escrow fees
- Appraisal fee
- Lender Admin fee
- County recording fees
Closing costs also can include processing fees, credit report fees, and discount points (used to buy down the interest rate). These fees can vary substantially from lender to lender. At Portland Loan Team we never charge processing fees or credit report fees.
Prepaids: These fees should be EXACTLY the same (regardless of lender) unless you opt NOT to have taxes and insurance included in your mortgage payment!
Prepaid items include:
- Daily interest from the date of your closing through the end of the month
- Property tax prorates so your lender has enough money in your escrow account to pay your property taxes for the full year when they come due in November
- First year premium on your homeowner’s insurance policy and a 2 month reserve
Check out Acorns!
This is an app that connects to your debit and credit cards and “rounds up” your transactions to the next dollar and saves/invests your virtual “change”. Every time you spend money you automatically chip in to your savings! It’s a cool concept and the app is super easy to use. You can also boost your savings by setting up additional automatic contributions.
Getting into the habit of saving is an important part of creating a brighter financial future. The most important part is to actually DO it. There are lots of ways to save money but this is one that is totally automatic and you don’t have to think about it. Just $4.50 a day adds up to over $1600 a year. Whether it’s padding your retirement funds or creating a vacation fund, Acorns is a neat tool that can really help out!