Understanding Rhode Island Mortgage Loans

How Do Mortgages Work?

There are lots of different features to mortgages in Rhode Island including the rates, fees and payment schedules that you should be aware of.

Fees & Rates

There are several things that can affect the overall cost you will pay for a mortgage in Rhode Island including the current interest rates, points and fees for the loan. The APR (annual percentage rate) for the loan is representative of the overall cost of your loan. The other factors include the interest rate, discount points and fees, which are described below.

• Interest Rates
  The interest rate for your loan is a fee associated with lending money that is attached to the balance of your loan at the end of every month. Your credit score at the time that you apply for the loan will have a drastic effect on your interest rate as well as the current markets for lending.

• Fees
  One of the more common fees that you will see on Rhode Island mortgages is the origination fee. This and other fees are assessed in order to pay the costs of the loan including paperwork and administration. Most fees are paid up-front during the escrow period of the loan and may be handled by the buyer or the seller of the home depending on the negotiations and type of loan being made.

• Discount Points
  Discount Points are offered by lenders that allow you to lower your interest rates on mortgages in Rhode Island. Usually 1 point will lower your interest rates by 1% and the more points you purchase from the lender, the lower your overall payment and interest will be to the lender over time.

All of the fees and rates explained above play a part in the mortgage you will eventually have to pay to the lending institution over the life of the loan. In addition to the interest rate, you must also plan to pay the taxes that the State of Rhode Island and your local county will charge you. There will also be the expense of homeowner's insurance, which is likely to be required by your lender in order to protect your (their) asset - the home itself, as well as shield you from the effects of lawsuits. Finally, the principal amount of the loan - the actual selling cost that you agreed to pay for when accepting the loan will make up the bulk (just barely) of the total amount you will pay for the loan.

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