Posted by & filed under Buying.

The most important first step in buying a home is financing which involves getting prequalified for a home mortgage.  It doesn’t matter if you’re buying Bergen County real estate or a home somewhere else – because your mortgage loan is so critical to your home buying process, you are naturally interested in any news about these loans.  Here is where you begin what I call Mortgage Rate Madness.

People afflicted with this disease believe that they can get mortgage rates at levels not seen because they don’t exist.  The other day I had a call from a consumer who had this disease – a really bad case of MRM!  She thought she could get a mortgage rate of 4%.  The reason she was so sure of this was simply because one of her friends heard this on the radio and someone else saw it on TV.

Hmm…..maybe at 3 in the morning you might see some infomercial where all sorts of nice people are sitting in their Bentleys (which they rented for the hour) telling the world all sorts of mysterious fables.  You know, the folks who make millions without working and get tons of free money.  It isn’t your fault if you get the MRM disease.  This virus is everywhere – it’s on the radio, it’s on TV, it’s online, it comes from a friend who heard it from a friend who heard it from…and on and on and on.

OK – how about a good dose of reality?  Mortgage rates are indeed low.  In fact, they’re so low that they’re truly at historic lows.  But the interest rate on your mortgage depends on many things – for example, if you have a small down payment, for almost everyone that means a FHA loan.  Because your down payment is small, the risk is greater to the lender so the interest rate is a little higher; the FHA specializes in such loans.  It’s all in the details as they say.

It also depends on how much money you are going to borrow.  Up to $417,000 it’s one rate, at $417,000 – $1 million it’s about one half point higher, etc.  Mortgage rates vary depending on how much you borrow, your down payment and, of course, your credit score.  I can tell you that that there is a cure for MRM disease – work with a good licensed mortgage banker.  Invest some time in getting properly educated and pre-approved for your mortgage.  It’s usually the biggest loan you’ll ever have.  If you go to the Financing section at you’ll find several.  Trust me – if it’s too good to be true, it’s MRM disease!

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