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Home > > Difference between 3.99 and 2.99 apr rate

Difference between 3.99 and 2.99 apr rate

When it comes to mortgages, many people tend to look at points and interest rates as to separate issues.

In fact, they can almost always be used as leverage against each other.Points and Interest RatesTwo critical components of a home loan are the interest rate and points charged at the outset. The interest between 3.99 difference and apr 2.99 rate rate is simply the cost of borrowing the money and applies to the total amount borrowed, to wit, six percent for example. The points on a home loan are an up-front fee that equates to a percentage of the loan. For instance, one point equates to an up-front fee equal to one percent of the total loan value. Paying one point on a $300,000 loan would equate to a fee of $3,000.Many people jump to the conclusion that points are bad and should be avoided at all costs. While this may seem like common difference between 3.99 and 2.99 apr rate sense, it is not true in all situations. From the lenderís view point, points and interest rates work hand in hand. If you have a unique cash situation, you may be able to save a ton of interest over the life of a loan by paying increased points at the outset of the loan. Generally, the more you pay in points, the lower the interest rate on the loan.If you intend to hold onto your property for a long time, paying maximum points on the mortgage makes sense if you have the cash. The reason for this is the money spent on the points will be easily recovered if you can reduce the interest rate by a full percentage point or more. Saving even one percent on an interest rate will save you tens of thousands of dollars in interest payments on a thirty year loan. In such a situation, it makes sense to pay $6,000 or so in point to save $30,000 or $40,000 in future interest payments. Of course, you have to have the cash available to do it.If you intend to hold onto a home for a short period of time, the same issues need to be considered. In this case, however, you will not have time to recover any money paid in points because you intend to sell in a few years. As a result, you want to shop for a loan that requires no points be paid. Yes, you will have to accept a higher interest rate on the loan, but this should be somewhat immaterial if you are only buying for the short term.The bigger point is points and interest rates should be viewed as connected parts of a mortgage. As a borrower, you can negotiate with lenders to raise or lower either one by tweaking the other.2

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"I'm new to the 'sell the put' strategy and there's something I don't understand: If ABC is falling and you don't wish to own the stock, you can come up with some more money and buy yourself out of the puts you sold and be done with it for a small loss."

"Can you give an example of this?"

Here goes:

When you sell a put, you are giving the market the right to "put" the underlying stock to you at a specified price. So, say ABC is trading at $70 and looking strong. The stock seems like it's going to continue higher. The 65 puts were a buck fifty, and you sold 10 contracts of them. So, you took in $1500. Now what you have done is given the market the right to force you under contract to buy ABC "at" 65 bucks, even if it falls to 60.

Granted you sold those puts because you believe that ABC is going to either continue higher or at least stay where it's at. If it does that, you take in the $1500, the options expire, and you made money. But what if it does't rise. The SEC says there is fraud, whatever. The bottom line is that it is falling instead of going up. Now, if it stays above 65, you have no worries. But what if it looks like it might fail 65 dollars? Well you've entered into a contract saying you'll buy it at 65. If you do nothing, that stock will be "put to you".

So, the way to get around buying 1000 shares of ABC, is to "buy back" the puts you sold. When you buy back your sold puts or calls, the contract is cancelled out. The play is over. So what's the catch? The catch is that you sold the puts for a buck and a half, but now they are say $7. So, you have to make a decision. Would you rather pay $7000 and get out of this trade, or do you want to buy 1000 shares of ABC at 65?

Some will be happy taking the stock. That's why it's a pretty good way to get stock a bit cheaper if you really want them. If a stock is $70.50 and you sell the 70 put and take in $2, if it falls to 69.90 and gets put to you, great! You wanted it anyway, and you got paid to take it. If however you were selling the puts as a profit play, then of course you have to manage that position.

Just like using stops on a stock play, you never want your options play to get away from you. If you took in say $1.50 on selling the puts, maybe you decide that if they rise in value to $3 you will buy them back. Everyone has their own strategy for this, but you do need to go into a put sale with an idea of what sort of risk you are going to allow yourself.

If you are a loan officer or mortgage broker, you have more than likely dealt with mortgage lead companies in the past.

If you are one of the ones that have invested money in lead companies in the past, than you fall into one of two categories.

Those that have lost money to lead companies, and those that are going to loose money to lead companies.

Loan officers have every reason to be skeptical of lead companies. However, if you are considering taking a shot with a mortgage lead company, here are a few things to keep in mind.

For starters, take your time, and do as much research as you can. Remember, you work hard for your money, so make sure those hard earned dollars will result in a return on your investment.

Speak with someone in the customer service department of the lead company you are considering. Find out where and how they obtain their leads. If they do not use their own web sites to obtain their leads, than move onto the next company.

If they are not using their own sites, than most likely they are buying them from a third party, and selling them second hand. So you can be sure that they have passed through the hands of many other loan officers.

Find out how they sell the lead and how it is delivered. Is it sold exclusively, or non exclusively? Can you cherry pick the lead, or is it a real time, streamline process? Either way works. It just depends on your style, preference, and most important, your time.

In the end, it is the quality of the lead that makes the difference. It just may be worth your while to spend a few extra bucks on a lead to ensure you are getting good quality.

Also, keep in mind, when speaking with someone in customer service, the quality of the service you receive, can be a good indicator of the quality of the lead you receive.

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