October 19, 2017

Today’s mortgage rates

Ever wonder why you get drastically different rate and fee quotes when you call around to shop for interest rates?  Well, this may come as a shock, but rates and fees aren’t all that different from one lender to the next.  Furthermore, it is illegal for a loan officer to make their commission based on the rate or fee charged.  So why the large discrepancies on rate quotes?  It might just be the way you are approaching it.

I want to help you to become an expert shopper.

Sure there might be a slight variation in the fees from one lender to another, but the rates are virtually the same, and we all know “You get what you pay for.” The main reason you get conflicting information is because most people don’t shop the right way.

(Calling 3 or 4 advertising companies and simply asking, “what is your rate today?” is the exact wrong way to shop for the best loan or rate.  No honest professional will be able fully answer your question by just rattling off a rate, and anyone who actually gives you a rate quote immediately is not someone you want to do business with, and most likely not the one with the best rate and fee structure. This approach to shopping for rates is equivalent to calling three car repair shops and asking, “how much to fix my car?”)

It is important to understand that there are many criteria which can affect the rates and fees for each individuals situation, the least of which is your credit score.  Some things that effect the rate or fee you pay are completely your choice, regardless of which lender you choose. For example, you may actually want to take a slightly higher rate in order to avoid some of the closing costs, or you may instead want to pay extra fees (commonly referred to as “points”) to get a lower rate.  Understand that the “no points, no fees” philosophy is an advertising gimmick and nothing more.  There are times when it makes perfect financial sense to pay extra fees to obtain a lower rate, and there are times when it does not. That is exactly the point. Every customer has a different situation, a different goal.

The best way to get an accurate rate quote, and also make sure you are taking advantage of the absolute best deal, is to let the mortgage professionals ask you questions, and then answer those questions accurately and to the best of your ability.  Now, I’m not saying don’t shop around, you can still call multiple places if you would like to. But, have a complete conversation about your current loan situation and your goals with each expert. Here is what you will find.  Not everyone is in fact an expert, and not everyone is as honest and ethical as we’d like them to be. The good news is, it will become immediately evident who you’ll want to work with.  Any mortgage professional worth their weight will ask you virtually the same questions, and the more detailed the questions, the more likely they are a true professional who will give you the best rate and program available in the market.

Additional considerations:

1. Do a little research about who you are calling.  Check the Better Business Bureau. You might be surprised to find that some of the biggest advertized bank and lender names have the worst track record of customer reviews. Those big advertizing budgets spent to create that warm, fuzzy brand name cost money.

2. Be wary of any up front fees, even if they tell you it’s for an appraisal. Anyone talking about obtaining an appraisal fee without doing a full application and running credit is a red flag. I have never in my career charged an application fee or a credit check fee.

3. If anyone quotes you a rate without running your credit, be prepared for bait n’ switch.  I don’t care if you have perfect credit and 50% equity in your home, anyone willing to quote you a rate without taking a complete application which includes a credit report has no business calling themselves a professional.  Remember what you were taught from a young age, if it sounds too good to be true, it isn’t true.

4. If someone tells you it’s going to take two months to get your loan done, hang up! They either have no idea how to properly submit a full loan file, or the company is poorly run.  Unless you create your own delays, a loan transaction shouldn’t take more than 30 days, ever, and that is when we are swamped with business. Most loans can be done from start to finish within three weeks.

Finally, mortgage rate pricing changes from day to day, especially in a volatile economy like the one we have now, so be prepared to get slightly different answers if you don’t do your shopping on the same day.

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