First-time homebuyers might not be aware of something veteran homeowners assume automatically: those advertised mortgage interest rates are not necessarily the rate that will be offered. To St. Louis consumers who usually assume that they are protected from false promises in ads, that can be pretty annoying. But as with some furniture store “interest-free” offers, those interest charges may suddenly appear if you don’t pay the balance in full by a certain date. It pays to read the fine print.
The reasons why the actual St. Louis mortgage interest rate you are offered may be higher than what you saw advertised on TV or on the web lie in definitions and qualifications. They aren’t misleading to home buyers who know what to look for.
As you would expect, home loan ads promote the lowest rates that can be honestly stated. But that published rate might have qualifications that don’t apply to the loan you will be promised if you apply. That will be the promised rate, which may be higher if, for instance, the published rate was only available for homes in a different zip code. A home loan ad’s small print may specify other qualifications, such as an applicant’s credit score, debt-to-income ratio—or it might only apply to loans of a certain size.
Equally important is that the advertised interest rate itself does not tell the whole story. The cost of a loan may include points or partial points—and since a “point” equals 1% of the amount of the loan, that can be a sizeable sum. When points are added onto the principal, the larger loan amount requires higher payments. Even for no-point loans, other fees—like processing, underwriting, appraisal, title and escrow fees—may be high or low, depending on the offeror.
What this means is what St. Louis veteran homeowners assume: that a higher interest rate might still constitute a better bargain when all the bits and pieces are considered. All the “fine print” details need to be part of the calculation. It’s one reason I always recommend that more than one mortgage originator be considered before making a final decision. I’ll be happy to assist with these and all the other parts of your St. Louis real estate endeavors!