Does the discount offered per point differ between lenders?
I am in the process of purchasing a home and have received two different quotes from two lenders for a mortgage. Both were obtained on the same day, thus market rate fluctuations are not a factor here.My question is this: lender A has given me an offer to pay 1.25 points in exchange for a rate buy down of .5%. Lender B says that the benefit would not be the same. In other words, for 1.25 points paid to Lender B would result in something more like .3% rate buy down. He also says that the benefit received from each point is set by Fannie Mae. What's the story here? I'm inclined to believe that the deal from Lender A would be better in this case (shorter period of time to recoup the initial expense). Can anyone explain? by simmonsfamily from Autsin, Texas. Sep 16th 2009
Kirk Anderson (KirkAnderson)
#24 ranked lender in Arizona - 50 contributions
Each Lender has different sources of money, and as such, different costs and yields. The best way to compare quotes is to get a Truth In Lending Disclosure from each. This will tell you which deal is actually better based on the disclosed Annual Percentage Rate (APR) which takes into to consideration the finance charges that you will paying. Another thing that you might want to do in addition to this, is request that both Lenders guarantee their closing costs in writing (that's what I provide to all of my clients), and that way you know nothing can change at the last minute. Please feel free to call me directly should you have any further questions.Kirk
Chris Kelso (Chris Kelso)
#7 ranked lender in Texas - 11 contributions
Have both lenders quote you without any points. This will give you a better estimate as to whom is giving you the better deal. Also... my personal opinion is that a buy down (points) is always a bad investment. email me at ckelso@wbmtx.com with any additional questions you may have.
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