Mortgage AnalysisLoan Estimate
Grade Assessment
Good deal with competitive interest rate, but some fees are slightly high.
The loan estimate presents a good deal overall, with some strengths and a few areas of concern. The interest rate of 2.99% is very competitive for a construction loan. The loan costs are reasonable, though some fees are slightly higher than average. The total closing costs of $3,245 (about 1.08% of the loan amount) are within an acceptable range. The loan terms are standard for a construction loan, including the balloon payment at the end of the term. The APR of 4.731% is higher than the interest rate due to the short loan term and fees, but still reasonable for this type of loan.
Loan Amount
$300,000
Effective after 1 years: assuming minimum monthly payments:
$304,880.92
Annual APR
2.99%
Effective with Closing Costs:
4.731%
Closing Costs
$3,245
The closing costs are reasonable for a construction loan, though some fees are slightly higher than average.
Terms
standard
The loan terms are typical for a 1-year construction loan, including the interest-only payments and balloon payment at the end of the term.
Potential Savings: $1,050+
Here are actionable steps to negotiate your mortgage costs:
Reconsider loan structure
Evaluate if the 1-year interest-only loan with a large balloon payment is the best option. Consider a traditional 15 or 30-year fixed-rate mortgage to avoid the risk of the $300,025 balloon payment.
Increase down payment
Consider increasing your down payment from 9.99% to 20% to potentially lower your interest rate and avoid private mortgage insurance (PMI) in the future.
Verify missing prepaid items
Request a complete loan estimate including prepaid items like property taxes and homeowners insurance. Ensure these costs are accounted for to avoid surprises at closing.
Explore alternative lenders
Shop around with at least 3-5 other lenders to compare rates, terms, and fees. Focus on finding a more traditional loan structure with lower long-term costs.