Mortgage Rates Are Not 1.99%. In Fact They're Back Over 3%

Some mortgage companies have generated buzz by advertising 30yr fixed rates of 1.99%. While it is possible to obtain such a rate, there is definitely a catch.
Rates are certainly low in the big picture.  Up until this week, they were as low as they’ve ever been.  The average lender was easily able to do a conventional 30yr fixed in the high 2% range for ideal scenarios.  The situation has deteriorated fairly rapidly since then.  More on that in a moment.
For now, let’s pretend rates are still at all time lows, because even when that was the case, 1.99% still wasn’t what it appeared to be.
The key concept that will help us understand why we could see 1.99% advertised when the average lender is almost a full percentage point higher is that of upfront costs vs interest rate.  Fortunately, it’s pretty simple.  If you borrow money, your lender makes money by earning interest over time OR by collecting finance charges upfront….(read more)Forward this article via email:  Send a copy of this story to someone you know that may want to read it.
Source: mortgagenewsdaily.comNew feed