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hey Kyle here with win the house you loved calm today we're talking about some mortgage secrets so I'm gonna let you inside on some tips and tricks that you might not know that might they're gonna help you save some money on interest and fees so let's go ahead and dive into this first of all let's talk about underwriting fees and points okay so when you're shopping for lenders they're going to give you different estimates of what the rate is going to be along with the closing costs as well and something that you're going to run into is points and any origination charges okay so your origination fees these are things like an underwriting fee may be an admin fee sometimes you have like a document preparation fee a processing fee all these random fees that a lender might charge okay and these are real fees lenders have to charge the money to get a loan closed but know that when you compare loans and you compare lenders that's you might have a lender a who charges an underwriting fee and has a certain rate and lender B charges a higher interest rate but has no fees so basically what ends up happening is those fees get put in to the rate so all this to say when you are looking to compare lenders make sure that you're comparing fee to fee oops FISA fee and rate to rate that way you have a fair comparison right don't look at lender a who has $1,000 and fees and a lower rate and say that they're better than lender B who has a higher rate and zero fees because what you can do is just ask lender B to show you what it would look like if you if they charge the same amount in points as other lender does in fees to get the same rate so hope that makes sense if it doesn't let me know in the comments and I can clear that up clear that up a little bit more also watch for point stuffing so point stuffing is really big especially on refinances this is where you really need to watch for for kind of point stuffing and what I mean by that is when a lender takes points on a loan and puts them in there and not really hopes that you don't pay attention to them but normally they just they're just going to charge those points and assume that you don't really know what you're looking at someone who does this a lot is Quicken Loans they put points in everything especially refinances so they'll go out and advertise we have a three point two five percent rate but they're charging two points so one point is one percent of a loan and that helps you decrease your interest rate so if you pay you let's say for instance you had an interest rate of 4% you might be able to pay at one point and bring that down to three point eight seven five percent okay so you paid one percent of your loan upfront prepaid interest to lower your interest rate so normally a little bit of points is fine I would say less than one point is normally always fine when you start to get above one point you need to start looking at a break-even table to see how long is it gonna take you to recoup this money so what happens a lot on refinances is lenders want to kind of lure you in with a low rate and what they're doing is they're just stuffing a bunch of points in there and increasing your loan amount because you don't really care you just see low interest rate I don't have to bring money to the table it's a win right no because it's you're paying thousands of dollars added to your loan you were already working on paying down your loan and they just increased your loan amount so you could have a lower rate so you could feel better who cares about that you really want to pay off your loan quicker and not just have a lower interest rate so watch out for that also look at waiving escrows okay I have a video about escrows and if you should use them or if you should waive them I personally always want to waive escrows waiving escrows is going to save you potentially thousands of dollars at closing because it closing if you have an escrow account normally you're going to have to pay a few months of homeowners insurance in a few months of property taxes and those are going to sit in the aside account almost like a security deposit for rent except this is like a security deposit for insurance and taxes and that money just sits there and collects dust okay so instead I would waive the escrow account just pay taxes and insurance on your own it's not difficult to do it all so normally you need to put 20% down or have an 80% loan right 80 percent loan to value which is the same thing as 20% down you need to have 20% down to waive escrows there are some lenders some lenders that we work with that will allow you to waive it with only 5% down so I'm big fan of waving escrows if you can you're gonna save yourself so much money if you do that okay next when you're getting interest getting interest rates and quotes from lenders this game about getting a mortgage is all about interest rate brackets I'm sorry credit score brackets not interest rate brackets so the way that interest rates are given and determined is by what category of credit score you fall into so the lower your credit score the higher your interest rate and the higher your credit score the lower your interest rate and it's all bracketed so a good example would be somebody who has a 638 credit score okay when I see somebody who has a 638 credit score I want them to hold off buying for like at least another month because the moment they cross the threshold of 640 all of a sudden interest rates start getting a lot better same thing with the next bracket up when they cross over 680 interest rates are getting even better and then up once they start crossing 700 they get even better so they're all bracketed as they go up so talk with your lender about hey if my score increased by just five points what if we got up to that next bracket how much could that change my interest rate because then you know maybe I only need to wait a month or two to increase my score to potentially save thousands of dollars on my interest rate because I can feel really ambiguous right your credit score is going up and down you're thinking how does it impact the interest rate it's all based on these brackets so talk to your lender about what's the next bracket that you can get to to to get that lower interest rate okay also your down payment is gonna change the rate as well so what I try to do when I'm pricing out quotes for my clients is make sure that we set up their loan to have the the most cost savings possible and one of the ways that we do that sometimes is actually by decreasing their down payment so a good example is on like smaller loans so if somebody is looking to buy a house for let's say 120 thousand dollars if they put thirty thousand dollars down their loan all of a sudden is below a hundred thousand dollars okay that is actually a higher interest rate loan than a loan that's above a hundred thousand dollars all right so smaller loans are actually riskier to lenders so they have a higher interest rate to them so sometimes what can happen is if you put 20% down you might have a higher interest rate than if you put 5% down okay so you want to work with a lender who's going to show you different down payment options because if you know you're comfortable putting 10% down what I would do is look at what's the rate for 10% down what's the rate at 5% down what's the rate at 3% down and then if let's say 5% down has a better rate what you can do is put the down payment on 5% and then on your first payment just add the extra 5% that you have remaining on the first payment that way you took advantage of the lower interest rate but you still put the same amount of equity into the home so work with a lender who understand is going to help you explore what those options look like also something to note is that banks normally charge higher interest rates on government loans than somebody like a broker would so I I'm a mortgage broker myself meaning that we shop for mortgage lenders on behalf of our clients so we work for our clients and help them find great loan products where as a bank only works for the bank right they only represent that pull of money and as a broker there's no intermediary fee is that even a word there's no no middleman fee that people think exists the lender is the one who pays the broker the client never has to pay the broker so sometimes what happens with these banks is that since they're government insured loans they are able to make more profit on them and what they do is they normally just pocket the extra profit someone like a broker isn't allowed to do that they have to pass on that savings to you so if you're good looking at a government loan like an FHA loan usda VA try going with a broker same with conventional i'd definitely price it out with a broker but government loans especially you're gonna find lower rates going with the broker because they can't take any extra profit and pocket it like a bank in a bank can pull whatever margin they want on that loan so if they have a loan that's less risky they're just going to pull the profit keep the rate high so that they could have extra money a broker can't do that legally they have to pass on the savings your way all right also focus on low costs we've been so trained in all this marketing material to focus on rate it's all about rate rate rate and what's ended up happening is we get so tunnel vision focused on rate that we forget about costs right just like point stuffing we people get so focused on this low rate that they're willing to pay thousands of dollars in prepaid interest that they spent years trying to pay down on their mortgage so what I would always suggest is focus on going with the lower cost first and then refinance into something that's cheaper right so like let's run through an example let's say right now you could get an interest rate of 4% all right so if you could get an interest rate of 4% right now what I would actually do is I would actually probably take an interest rate of maybe four and a half percent or five percent and receive a credit back at closing towards some of my closing costs all right so I got some free money let's say I got two thousand dollars in credit because I took my rate up to five percent okay I got two thousand dollars of free money and then when interest rates drop in the future then I would refinance into a cheaper mortgage right I got those costs I took advantage of the credit that was available to me so don't always focus on getting the lowest rate possible especially if you have to pay for it because there's going to be so many opportunities to refinance win rates do lower because rates are always going to cycle up and down so I wouldn't focus so much on the rate as I would you know you have to have the proper balance between rate and costs okay you can close at the end of the month to save some more money on prepaid interest so prepaid interest is basically what you're charged from the time that you closed until your first payment is due so a minimum of the month is always skipped between your closing date and when your first payment is due so that extra gap plus any day zimba to after that get charged interest you don't have a principal on it but you have to pay interest so if you close the end of the month let's say you know you close on the 30th you only have to pay one day of prepaid interest if you closed on the first you're gonna pay 30 days of prepaid interest all right so that could be anywhere from you know the difference of on a smaller loan $200 to on a larger loan upwards of five 700 $1,000 that you could save and closing costs if you close at the end of the month and finally get a real cost analysis okay don't just compare rates what I see people do so much is all they want you know we've been so focused to are so taught to just focus on interest rate and so they go around and call and say what's your rate what's your rate what's your rate that person had the lowest rate I'm gonna go with them and you end up finding out that that actually wasn't the cheapest loan that one had points and that one had costs to it that the other lenders didn't so I always suggest getting a full cost analysis and not just comparing rates we do that by a tool called a total cost analysis where we have a custom web page that we give all of our clients it lays out each loan so we'll say alone a B and C you could see the rate the payment the closing costs but then it's gonna detail your actual cost so over five years what's the actual cost difference in the savings between the loans so then it will say the loan C is the cheapest over five years over 10 years loan B is the cheapest and it helps you break down what really matters which is the money that comes out of your pocket not this imaginary number like the interest rate right the interest rate is just a representation of how money is moving not necessarily how much how quickly it's coming out of your pocket and I think that's where we get confused with interest rates a lot is we think the interest rate is exactly how much money is getting pulled out of my pocket each month and it's not true the interest rate is just a metric that tells us a little bit of how that money is moving but there are more parts and pieces that go into it so work with a lender who's going to detail these loans side by side who's gonna shop on your behalf and show you what would it look like if you change your credit score by a couple points can we get to the next bracket save money what would it look like if we did different down payments can we get to a different loan amount bracket and save money what would it look like if we compared five different loans side-by-side and saw what's the actual cost difference between these okay this should give you a good idea of how to lower some fees and interest here if you want to learn more about escrow accounts and saving money this video right here is going to help you understand everything you need to know about escrow accounts and why you absolutely need to waive them thanks so much for watching I'll talk to you soon