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HOW DO I GET THE BEST RATE ON MY MORTGAGE? It is NEVER about the best rate. It is about the best MATH. Meaning, consumers should consider the best combination of rate AND cost when shopping for a mortgage. There is no other answer than that. So why isn't the lowest rate the best deal? The reason is that lower rates typically come with more points and fees. This is not the real issue, however. The real issue is that when you pay upfront points and fees, there is a break-even point to contend with and tax deductions to figure out. In the case of a purchase loan, points are tax deductible in the year that you pay them. With a refinance, the points are usually only deductible over the full term of the loan. That could be 30 years, making the break-even point years down the road! So why do lenders advertise really low rates with all of those points and fees? Because they know that most consumers look at only the rate, and not the math. And this advertising strategy works very well. It only takes a few minutes for a real professional to figure out the "math". After that, it's your decision. Steve Puchalski is a Senior Loan Officer with GMAC Mortgage, the 6th largest residential lender in the country. He brings 7 years of financial planning experience to the mortgage industry and specializes in home purchase, refinance and home equity loans and lines of credit. He can be reached at (248) 822-7558 or on the web at www.stevepuchalski.com. © 2005 All Rights Reserved. No part of this article may be published without advance written approval.
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