point on mortgage

[ShanetheMortgageMan]

The term "1 point below Prime" is a marketing gimmick, that phrase sounds good doesn't it?  It does not mean your rate would be 4.81%.

[Anonymous]

What does it mean?

And what will the interest rate be?

Thanks

[ShanetheMortgageMan]

Honestly, it means nothing... I've never used the term "1% below prime" as it's ambiguous, meaning it's industry jargon used to throw off the client in anticipation they will like how it sounds and hope they won't ask any further questions.  But you are too smart for that, evident by you asking more questions (which you should do, so good job).  The only "Prime" refers to the Prime Rate published by the Wall St Journal, which you can find info at http://www.wsjprimerate.us/wall_street_journal_prime_rate_history.htm, and is currently 7.5%, but that has little direct impact on 1st mortgage rates.  If they are offering you a 6.5% rate you should get a couple other options to compare.  Bottom line is you should shop around, just because something sounds good doesn't always mean it's going to be the best for your situation.  If you are choosing your financing term strictly due to rates/fees, and not how things are being explained to you by the mortgage professional offering you the loan, then you could be setting yourself up for confusion/disaster down the road.  Understanding how purchasing a home works is equally important as getting good rates/terms.