Advice on which rate to pick?
we are buying a home and our lender suggested two options.
5.875% at 418686 and need 5000 closing or
6.375 at 411111 no money down.
6.375 would get us a 10,000 credit which we would use to lower cost of house
Her email is below:
Okay . . . see attached for today’s rates.
5.875% is still available, but I think the sweet spot is 6.375%
At 5.875%, you would need to bring in $5,067 (your earnest money may cover that), your payment would be $2965, you would owe 418,686
At 6.375%, you would need to bring in $221 (your earnest money will cover that, the rest would be refunded), your payment would be $3050, you would owe 411,111
The difference in your payment is $85, but the difference in what was due at closing is $12,540.
It would take 12 years for that not to make sense!
I believe you will only keep this loan for 1 year, tops!
I expect lower rates and the ability to refinance you into a lower payment.
if we do this after 1 year, this idea saved you 11,520!!
After 2 years, this idea saved you $10,500
After 3 years, this idea saved you $9,480
After 4 years, this idea saved you $8,460