Mortgage Interest Rates: Or, The Greatest Lie on Earth
The number one question we get in the mortgage business is: What will my interest rate be? It's an important question to ask, that is agreeable by all. But, more importantly than asking the question is to know whether you are getting a straight answer or not. That's why I ask you to consider these important points before shopping for a mortgage.
Never Trust any lender about your interest rate until you are shown a rate lock. This is the most important point...do NOT trust a lender about your interest rate until it is written in stone. I talk to hundreds of people every month and their first concern is always the rate. I say to myself, "Self, you know was well as I do, that I am going to tell this person the truth about needing to apply before we talk about rates, yet I have only a 50/50 chance of landing this client." The reason being simple...if they talk to someone else, they probably are going to get the same old lame lines about how rates are low and that they have the lowest rates in town.
Extra, Extra, Lowest Rates in Town! This always comes from people that have no say so in what the interest rate will be. Truth is, the rates are identical at 99.9% of the lenders out there and if they are different, it will be very small fractions different. Lenders have been misleading people about rates this way since the beginning of lending and it has worked for unscrupulous lenders for years and years. The fact is the only way to have the lowest rates in town is to loan your own money without borrowing it first from someone else. The housing crisis we are in now has at least shown us one cold hard fact.
Nobody lends their own money! Even most credit unions now broker their loans through the same mortgage companies that any mortgage broker does. How can their rates be better? Banks have been brokering their loans for a long time, but why? Simple- they can have a bank and portray that they lend their own money when in fact, they don't It's all about portraying something until you are on the hook. Don't fall into this trap. Especially with all of the banks and mortgage companies failing, it is a pretty level playground out there.
Avoid the Noid! Let me show you another of the old tricks that lenders have used for years. You: What kind of interest rate can you get me? Lender: For you? 5.25%! You: Great I'll go find a house I want to buy! ***Two weeks go by. You: I found a house. Lender: Great let's get you approved and you can bid on it. Oops your credit score is lower than what the investors want...your rate is going to be 7.25%. You: Oh no, well I have already spent so much time with you, I am sure by now you wouldn't lie to me. It's my fault anyways for only have a 750 FICO, let's move forward.
Sound silly? I assure you that this is what happens to most people. In the lending game the object is not to be straightforward, but to lead you on until it seems like more of a hassle to switch lenders than to pay more per month. Never trust any lender that promises on a rate before you have given them all of your documentation and have been approved-NOT PRE-APPROVED for a specific loan.
Pre-Approved...more like Pre-Historic. Don't Rely, Apply. Rates change several times a day every single day of the week. The easiest way for your lender to weasel out of the blame for your rate hike is to talk about how things have changed, time has passed, or you did something that you shouldn't have done.
Any last words? I would say...consider the fact that interest rate alone is probably the worst way to chose a lender. And for goodness' sake...can we please realize that getting a loan from Florida when you live in Washington...might not be a good idea? Ask yourself...what stake does this 1-800 number have in me succeeding or failing in my financial endeavors. You can shop around all you want, but do so by getting approved by a couple of lenders and be ready to lock it in right way. And...all together now..., "Until you Lock, they're promise is a Crock." Crock as in "of poop".
Never Trust any lender about your interest rate until you are shown a rate lock. This is the most important point...do NOT trust a lender about your interest rate until it is written in stone. I talk to hundreds of people every month and their first concern is always the rate. I say to myself, "Self, you know was well as I do, that I am going to tell this person the truth about needing to apply before we talk about rates, yet I have only a 50/50 chance of landing this client." The reason being simple...if they talk to someone else, they probably are going to get the same old lame lines about how rates are low and that they have the lowest rates in town.
Extra, Extra, Lowest Rates in Town! This always comes from people that have no say so in what the interest rate will be. Truth is, the rates are identical at 99.9% of the lenders out there and if they are different, it will be very small fractions different. Lenders have been misleading people about rates this way since the beginning of lending and it has worked for unscrupulous lenders for years and years. The fact is the only way to have the lowest rates in town is to loan your own money without borrowing it first from someone else. The housing crisis we are in now has at least shown us one cold hard fact.
Nobody lends their own money! Even most credit unions now broker their loans through the same mortgage companies that any mortgage broker does. How can their rates be better? Banks have been brokering their loans for a long time, but why? Simple- they can have a bank and portray that they lend their own money when in fact, they don't It's all about portraying something until you are on the hook. Don't fall into this trap. Especially with all of the banks and mortgage companies failing, it is a pretty level playground out there.
Avoid the Noid! Let me show you another of the old tricks that lenders have used for years. You: What kind of interest rate can you get me? Lender: For you? 5.25%! You: Great I'll go find a house I want to buy! ***Two weeks go by. You: I found a house. Lender: Great let's get you approved and you can bid on it. Oops your credit score is lower than what the investors want...your rate is going to be 7.25%. You: Oh no, well I have already spent so much time with you, I am sure by now you wouldn't lie to me. It's my fault anyways for only have a 750 FICO, let's move forward.
Sound silly? I assure you that this is what happens to most people. In the lending game the object is not to be straightforward, but to lead you on until it seems like more of a hassle to switch lenders than to pay more per month. Never trust any lender that promises on a rate before you have given them all of your documentation and have been approved-NOT PRE-APPROVED for a specific loan.
Pre-Approved...more like Pre-Historic. Don't Rely, Apply. Rates change several times a day every single day of the week. The easiest way for your lender to weasel out of the blame for your rate hike is to talk about how things have changed, time has passed, or you did something that you shouldn't have done.
Any last words? I would say...consider the fact that interest rate alone is probably the worst way to chose a lender. And for goodness' sake...can we please realize that getting a loan from Florida when you live in Washington...might not be a good idea? Ask yourself...what stake does this 1-800 number have in me succeeding or failing in my financial endeavors. You can shop around all you want, but do so by getting approved by a couple of lenders and be ready to lock it in right way. And...all together now..., "Until you Lock, they're promise is a Crock." Crock as in "of poop".
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