Have you been amazed when public officials with opposing positions site the same statistics; or when two ‘scientific’ polls have completely different results for the same event? We have learned that numbers can be manipulated, making it difficult to understand what has been engineered to confuse.

Many hope that consumers shopping for mortgages remain unaware they are comparing apples to oranges. In daily life as in politics, numbers and careful wording can mislead the unwary. Understanding how numbers in mortgage quotes can be manipulated is crucial to making a sound financial decision.

Platinum Alliance Mortgage assumes that being clear and honest with our clients will encourage them to bring their future business to us and to refer their friends, neighbors and associates. Unfortunately, too many consumers who truly want to believe they have been rewarded for their diligence with better rates and costs, and do not ask the necessary questions. If you are not being given quality analysis and accurate numbers you may be spending far more than you realize. Here are some things that you should know!

· No Cost Loans: The cost is simply added to the interest rate. In effect you will pay more every month, which can doom you to paying and repaying those ‘phantom’ closing costs many times over.

· Reality: Any loan can be expensed this way if it is in the client’s best interest. For some borrowers this may be a good option. One of our loan officers along with a multifunction mortgage calculator can determine the best option for you. This is not a “no cost loan”; it is a way of paying for the loan.

· The Lower Rate: You can lower your rate by buying points. This can lower your monthly payment.

· Reality: The payback or break even point on buying points can be several years out. If you are a typical borrower and only hold your loan for 4 or 5 years, you may find the savings to be slim or nonexistent. This is definitely a math question and requires that you have a good idea of your future plans. Some borrowers buy points to improve their debt to income ratio to allow them to qualify for a particular loan product. This does require they have available equity to cover the additional loan cost. Buying points is a strategy for personal debt management, not an ethical way to sell a loan by appearing to have lower rates. Rates are determined by geopolitical, macroeconomic factors and while linked to factors such as the bond market, are clearly not set by brokers.

· No Origination Fees and No Lender Fees: A rose is a rose is a rose. And a cost is a cost is a cost. Call it something else, hide it elsewhere; but if it comes out of your pocket it is a cost.

· Reality: Talk with our mortgage experts to make sure you understand everything that you are being charged. Large internet lenders and broker banks are notorious for added charges that, because of a rule change for which they have lobbied at great expense, can be added at closing though not included on their GFE. One of the largest and most well known internet lenders has a hidden $760 “Computerized Loan Origination” fee. Read more at http://ezinearticles.com.

· Days of Interest: Unless your loan closes on the last day of the month, you will have to pay interest on your loan for the remaining days of the month in which you close.

· Reality: Many companies quote only one day of interest. If you close early in the month, your actual cost to close could be under reported by nearly a full month’s interest, which in most cases is many hundreds or even thousands of dollars.

· Title Charges: These are widely under reported, often only including a filing fee. If the only number is around $25, your GFE is not accurately reporting the actual cost to you.

· Reality: We have our own title company and our insurance fees are underwritten with the lowest costs available in the industry. For your protection there will be a title exam and title insurance. They are all standard in the industry and no bank will waive these when lending money.

· Reissue rates: Some lenders may present reissue rates as a way they have to by pass title costs if the loan is a refinance.

· Reality: This applies to all refinances and is not a little known option that only certain lenders have access. It acknowledges that the property in question has had a title search with the same borrower and that the previous search streamlines the title exam process.

· Reserves (Escrow): Often the reserves on the GFE is marked TBD (to be determined). The lender states that this is not a part of their closing costs thus lowering their apparent cost to close.

· Reality: If you plan on escrowing your property taxes and insurance, your lender will need to establish an account with a balance containing the equivalent of about 6 months of these expenses. This amount must be available at the time of closing.

· Government Recording Fees: Out of state lenders usually profess ignorance of the Minnesota Registration Tax and even some local lenders will say that it is not one of their fees.

· Reality: This is usually several hundred dollars. It is a tax. Unfortunately, taxes are never optional.

· APR vs. Advertised Rates: Federal law requires that APR be disclosed along side the actual interest rate as a means of helping borrowers make an informed decision. APR factors the costs of doing the loan into the rate. In theory the lender with the lower APR should be the better choice, assuming that both are using the same base rate.

· Reality: Unfortunately, not all quotes are based on the same base rate. Worse yet, APR assumes that loans are never prepaid, assumes zero inflation, ignores tax advantages and tax consequences and gives no value to the money used for closing costs. APR is calculated by taking the mortgage amount less any lender fees, points and interim interest. The more fees, the lower the amount financed. The monthly payment is calculated as a product of the financed amount to give the annual percentage rate. Once again the answer is in the math.

Remember, you want to compare the total cost you will incur closing the loan you are considering. Low rates are important, but as we have learned, rate can be lowered with points or can be adjusted to cover other expenses. As you can see this complicates rate and cost shopping. It is impossible to make a sound decision when the numbers you are using are manipulated or left out all together. Let one of our debt management specialists do the math with real numbers (all of them) to determine your real savings. Call or apply today.