Two Decisions
	When you choose a mortgage plan you have one or two basic decisions to make: Which mortgage plan(s) fit(s) your income and savings. Which of the plans that fit your income and savings should you choose. Making the first decision is relatively simple. Look for plans which require "total monthly investments" within your income qualification range and look for plans which require "initial investments at closing" which are within your savings plus other sources.
The Good News and the Bad News
	If you find that more than one mortgage plan fits your income and savings, I have some good news and some bad news. The good news is that you have a choice; the bad news is that the choice is not always easy. If life were simple, you could choose a mortgage by looking at just the interest rates. But, choosing a mortgage plan based solely on interest rates is like buying a car by looking at pictures. You need to consider several things in making a decision on a mortgage including: Contract interest rates Origination fees and discount points How long you plan to own the home Your marginal tax bracket How you would invest the difference in monthly and initial investment
One Point About "Points"
	Points are basically a percentage of the amount you borrow that you pay when you get your mortgage. The nice thing about paying points is that the more you pay in points the lower your contract interest rate becomes. The not so nice thing about paying points is that points are effectively a prepayment penalty. The effect of paying points is that the sooner you pay off your mortgage, the higher the lender's yield.
What No One Else Will Tell You
	The decision to pay points or not pay points is not easy. You really should consider all five of the factors that I discussed above. The procedure is not simple. You need to look at the after tax initial and monthly investments to determine which plan gives you the best value over your anticipated period of ownership given your anticipated success in other investment plans. I have never seen anyone else give out this information outside of the technical literature. For the convenience of my clients, I developed computer software which computes an estimate of values you can use in comparing conventional fixed-rate mortgage plans.
Shop Around
	Conventional fixed-rate mortgage plans are not the only mortgage plans available. There are also balloon, adjustable rate, and special mortgage plans which mortgage brokers stay awake nights dreaming up. Take the time to visit several lenders and learn about your options.
Call Me with Your Questions
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