Posted by Brian (WA) on April 17, 2007 at 20:52:46:
You are right both term and rate are important but term is more important. But the note rate and effective rate are typically two different numbers and the term determines your effective rate.
By terms, I am talking about the term on the loan. For example if you are getting a 30yr fixed rate loan what is the term 30 years right? Your payment is fixed and that’s it, not so great, and the effective rate you pay depends on how long you hold the note. If you keep the loan for the full 30 years your note rate will take effect on the 30th year.
What if your term could be 5 years or 10 years? Your note rate might be higher than a ‘great rate’ but your effective rate will be significantly better saving you tens of thousands of dollars.
I can understand your frustration with all of the ‘predators’ but I’m not sharing information with you for a better yield spread and if that’s what my response seemed like I apologize.