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Shopping for the lowest rate? Or the Overall Lowest Borrowing Cost?
There is a Difference!
- Shopping for a mortgage can be a confusing and frustrating game. MORTGAGE RATES CAN AND SOMETIMES DO CHANGE DAILY. However, the most important thing to remember is that there are several items (26 total to be exact) of information a lender needs in order to give you a “real” quote. If you have received a rate without the lender obtaining any of this information from you then you have probably just received a “quoted rate” that is probably not a very accurate measuring stick for you to base your decision on.
- Make sure you compare apples to apples when it comes to your interest rate and closing costs. MAKE CORRECT COMPARISONS. When looking at estimates, don’t simply look at the bottom line. You absolutely must compare lender fees to lender fees, as these are the only ones that the lender controls. And make sure lender fees are not “hidden” down amongst the title or state fees. A lender is responsible for quoting other fees involved with a mortgage loan, but since they are third party fees – they are often under-quoted up front by a lender to make their bottom line appear lower, since they know that many consumers are not educated to NOT simply look at the bottom line! APR? Easily manipulated as well, and worthless as a tool of comparison.
- UNDERSTAND THAT INTEREST RATES AND CLOSING COSTS GO HAND IN HAND. This means that you can have any interest rate that you want – but you may pay more in costs if the rate is lower than the norm. On the other hand, you can pay discounted fees, reduced fees, or even no fees at all – but understand that this comes at the expense of a higher interest rate. Either of these balances might be right for you, or perhaps somewhere in between. It all depends on what your financial goals are. A professional lender will be able to offer the best advice and options in terms of the balance between interest rate and closing costs that correctly fits your personal goals.
- BEWARE OF DEALS THAT SEEM TOO GOOD TO BE TRUE; THEY PROBABLY ARE. According to Barry Habib and the nationally known Mortgage market guide, (www.mortgagemarketguide.com), a lawsuit is in the works against Bankrate.com, after hundreds of consumers complained about lenders who failed to deliver the rates and terms they promised on the website. In fact, one lender actually told a Bankrate employee that a consumer would need a "direct pipeline to God" in order to qualify for the rates and terms they advertise on the site. Why would a lender post rates and terms they are unwilling or unable to honor? To lure in consumers who truly want to believe that they are getting an interest rate or cost package that is significantly lower than all the competition. And by the time the consumer finds out they are not getting the package they were promised, they likely have wasted enough valuable time that they feel somewhat stuck to use whatever terms the lender hauls out. Internet lenders advertise very low rates and promise great deals, but beware of what you may be getting in to. If you need some convincing of that check out what some borrowers have had to say about their experiences with some of the internet’s biggest lenders: http://www.consumeraffairs.com/finance/quicken_loans_mortgage.html; http://www.consumeraffairs.com/finance/ditech.html
Bottom line - the internet at large can be a great place to gain basic trends and information about a home loan, but the Bankrate lawsuit illustrates the need to work with a Trusted Advisor. A home loan is generally the largest financial transaction of your entire life - working with a real professional who can advise you on correct strategies and programs for your needs is a must.
Remember this, the absolute lowest rate and terms on the WRONG financial strategy or loan program for your life will prove to be far more costly than a competitive rate package on the RIGHT strategy, which correctly fits your financial goals and needs.
Contact us today and tell us what’s important about your home loan to you and we will promise to provide you with very competitive terms and super service on a loan that is customized to fit your overall financial goals.
 Alcova Mortgage is an Equal Opportunity Lender. |
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