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Rates Explained

Churchill believes it is in our customers’ best interests to quote rates based on each borrower’s situation instead of setting improper expectations by quoting the lowest available rate.

Over the years we have found this provides the best customer experience and continues our commitment to being transparent about every detail of your loan.

Here are a few more reasons we do this.

One Size Does Not Fit All

Some people may want fixed rates, others may want interest only, and others may want an adjustable rate mortgage (A.R.M.). That is why there is such a wide array of mortgage loan programs to fit the individual needs of today's homeowners. But all of these programs and interest rate options can make it very hard to compare "apples to apples" when seeing and hearing interest rates quoted.

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Here's a little "Mortgage 101" to help you understand some of the most common characteristics of a loan.

The Basics:

For example, let's say 30 year fixed rates range from 5.50% - 5.875%, 0 Discount points and 0 Origination fee. What does this mean?

30 year - This means your loan is set up to be paid off in 30 years.

Fixed - This means your rate & payment will not change for the length of the loan.

5.50% - This is the interest rate at which you would be charged on your loan.

0 Discount points and 0 Origination fee - These are basically the same thing, pre-paid interest. In exchange for the borrower being willing to prepay interest, the lender will typically give a lower interest rate.

One "point" = 1% of your loan amount. Therefore, one point on a $150,000 loan would cost you $1,500. The problem is that in most cases the reduction in interest rate is not enough to justify the amount of pre-paid interest (discount points and origination fee) charged.


This is the area where most people get confused when they see lower rates published in the paper or on the internet. The lower the rate, the higher probability that there are fees associated with getting that rate that may not be to your benefit. To see what rates were actually LOCKED for the last few business days (or historically) click on this link:

**Please notice that the rates also show the corresponding points that were paid to get that rate.

Why Is This Important To You?

Freddie Mac and Fannie Mae are the two largest issuers of mortgage-backed bonds, and the above Freddie Mac web site only reports the rates that were LOCKED - not advertised. (Fannie Mae does not have this feature) This site does not advertise mortgage rates, it only reports them. Therefore, you get an unbiased information to make your best decision.

If you are being quoted a much lower rate than what you see here, something could be fishy. Don't Be Fooled

Q: Paying Points Or Origination Fees Makes The Rate Lower, So That Is A Better Deal, ... Right?

A: Rarely. Many times people lose money and don't even know it. To correctly assess the possibility that paying points will benefit you, you must know;

a) The minimum amount of time that you are sure you will stay in the home

b) The actual cost of the points in dollars

c) The dollar difference between payments when paying points and not paying points. Let's say you have been quoted 6.25% with No Points and No Origination Fees, and you see another quote for 6.00% with a One Point Origination Fee.

Your loan amount is going to be $150,000.00 for 30 Years.

Which one is the better deal?

Start by answering the above questions:

a) The minimum amount of time that you are sure you will stay in the home (3 Years min.)

b) The actual cost of the point in dollars (One point = 1.00% which equals $1,500.00)

c) The dollar difference between payments when paying points and not paying points.

6.25%, No Points = $923.56

6.00%, One Point = $899.33

It looks like you will save $24.23 each month by paying the Origination Fee.

But you paid $1,500.00 for that lower rate - how do you compare?

Take $1,500.00 and divide it by the $24.23.

Result = 61.91 months

This tells you that you must stay in the home for at least 62 months (5 years and 2 months) just to break even.

Q: What if you have to move in 3 years? What happens to that big savings?

A: In this scenario, you actually lose money by paying points.

This is why it is so critical to work with a lender that asks the right questions, and is dedicated to always giving the customer the best advice - not try to "sell" you on a rate or program.

Q: Is The Lowest "Published" Rate Always The Best?

A: You always want to get the best terms for your loan.

But your search may not always bring you just what you expect if you are only looking at the interest rate. Some lenders publish artificially low rates that they can't actually deliver, or require large upfront fees. So you need to know all the costs that are associated with that rate to make an educated decision.

That requires a Good Faith Estimate of the costs, as well as a Rate Lock Agreement signed by the Lender - guaranteeing you that rate.

Otherwise, if an issue arises about your rate or costs, you will have nothing to use to prove that you were actually promised that rate. TRUST is really your best ally, and you really want to look for a lender that has a great reputation and is highly referred by people you know.

Q: Should You Always Get A 30 Year Mortgage?

A: Depending on your current and future plans, locking in a fixed rate for a long period of time might not be the most beneficial option for you. There are many factors to consider, and asking you the right questions is what being a Mortgage Planner is all about.

Q: What Causes Rates To Constantly Change?

A: There is no easy answer to explain what causes rates to change, but generally speaking, it is Inflation that will make interest rates rise.

Rates fluctuate up and down, day to day, hour by hour. Money is a worldwide commodity, and any significant event around the world that looks like it may even remotely affect the economy is reason for interest rates to move up or down.

Examples are politics, wars, economic indicators (i.e. employment data, new home sales, car/truck sales, factory orders, etc.), government statements or unrest, natural disasters (i.e. floods, earthquakes, famines, etc.).

All it takes is a publicly voiced theory or assumption from a influential person (i.e. Federal Reserve Chairman, President of U.S., etc.) and the rates can make sporadic moves.

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