Some key tips regarding interest rates:
- It’s not the rate you need to know:When applying for a insurance, never just ask for the “interest rate”, but always ask for the APR. The APR includes fees and cost and is the actual cost of the insurance on an annual percentage basis (if specified). The interest rate alone does not. Therefore, you may get an priced interest rate of 5.00%, but after fees and costs the APR is 5.50%.
- Check out April:Once you quote your APR, always check your mortgage calculator (these are free online at places like bankrate.com) for accuracy. All you need is the insurance amount, repayment and verification term. If the insurance amount, repayment and term you placed do not match the APR that was quoted from you, it means that the insurance amount has been misquoted and you need to find out the truth.
- The low price you see is not necessarily what you get:Don’t be fooled – the low prices you see advertised are for the best qualified. This means 720-740 FICO or higher in the market today, with verifiable income, a maximum 80% insurance-to-value and a low debt ratio. As your credit score decreases and your capital utilization or debt ratio increases, so will your rate! Also, there are a lot of extra “premiums” for things like cash out, condominiums, and the like.
- Average is not a first consideration in many cases:Although APRs and APRs are important, what is more important is what you get in relation to the rates and APR. You can get a good rate and a bad insurance or a competitive rate and a great insurance. It’s about looking at more than just price and payment, but also: term, tax costs, fees paid, purpose of the insurance and overall cost or benefit. In other words, if you get the Greta rate, but extend the term of the insurance, increase your taxes, pay unnecessary fees and don’t take advantage of the best insurance for your situation, it won’t help (this happens most often in the rate and refinancing term). But if you cut your payments, terms, and taxes, reduce debt, save money up front, improve your finances, and negotiate fair fees, you’ve done yourself a really great service!
Let me leave you with this block of truth from Proverbs 24:3 – “By wisdom a house is built, and by understanding it is established.”