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Financing Confident Decisions
Contact Residential First Lending About Residential First Lending Apply Now Debt Consolidation Credit Solutions Home Equity Financing Refinance Loans Purchase Loans Any cost in excess of principal payments should be evaluated when selecting a loan.

How do you really know which loan is right for you? It's simple. Determine how long you will have your new loan. Review our True Cost Comparison. Then choose the loan scenario with the lowest True Cost.     See Example

The Fourth Factor
Loan costs are incurred four ways during the term of the loan. First there are the costs associated with obtaining the loan: points, lender fees, title, escrow, appraisal, closing, etc. Secondly, there are costs during the term of the loan. This cost is primarily interest. The third possibility of cost is associated with paying off the loan. This usually refers to penalties associated with early payments of principal.

The costs described above are well known but there is a frequently overlooked fourth cost factor. This fourth factor is amortization disparity. Amortization is the reduction of the principal balance that occurs as loan payments are paid over time. The loan term and the interest rate are the two variables that determine how much of each payment applies to the principal reduction. The amortization disparity is the difference that occurs in the principal reduction of two loans that have the same original balance and different terms and/or interest rates. The real cost of amortization disparity is incurred when two loans with the same original balance and the same term have different interest rates. The cost associated with the overlooked Fourth Factor will often exceed the total cost of obtaining new financing including lender fees and points.

True Cost
The best way to evaluate your new financing, including the fourth factor, is to obtain a True Cost ComparisonŠ* from Residential First Lending. Our experts will compare several financing scenarios then provide you with a written report that includes points, lender fees, title, escrow, appraisal, closing, interest over the expected term of the loan, amortization disparities, some tax considerations and more. Using our report, you can isolate what we call the "fixed rate premium." You can identify the benefits of a fully amortizing 15 year loan, and you can interpolate the break even point on a loan transaction with points and cost versus the popular no-cost loan. With all of this information in hand, you will make your financing decision with confidence. Contact us today. You will know which loan is right for you.

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