Minnesota Mortgage Blog - MN Mortgage and Real Estate News

BankRate.com settles Bait-and-Switch Lawsuit

RATE SHOPPING?  Read this FIRST!
(No matter WHO you use, print this page for future reference)

How Do I Get The Best Rate?                        
It is never about the best rate. It is about the best MATH.    

There is NO other answer than that. So why isn't the lowest rate the best deal? First, lower rates come with more points and fees. That is not the real issue, however. There is a break even point to contend with when paying closing costs, points and fees, plus tax deductions to figure out. In the case of a purchase loan, points are tax deductible in the year that you pay them. That is good, but then again, so is the interest you think you are saving. With refinances, the points are usually only deductible only over the full term of the loan. That could be 30 years, making the benefits and the break even point years down the road. So why do lenders advertise really low rates with all of those points and fees? Because they know most consumers look at the rate, not the math. That advertising strategy works really well. We don't play that game. How about the lowest APR? Generally, shopping by APR isn't the answer either. The more points you pay, the lower the APR. But is that the best deal?

If you need a loan? How about getting the BEST loan for your overall wants, needs, goals, and ability. We take apart each rate and fee quote to find out what the best MATH is, period.  It only takes a few minutes for our professionals to do this FREE Service for you using special software we have. We work it up, and sent it to you (Its called a Total Cost Analysis). After that, it's your decision, and its as easy as 1, 2, 3.

What Causes Mortgage Rates To Change?
Did you know that one or more rate changes per day is normal?  Actually, it is unusual not to have a least one rate change in a day.  Most people do not know that.  Rate quotes can change when you call back later that same day.  In our business, a rate change also includes a change in the point cost for the same rate.  In other words, a rate can be no points in the morning, then later that day cost 1/4 point.  That is a rate change.

Did you also know that mortgage rates are not directly affected by what the FED does? Many times a fed rate cut can cause mortgage rates to go up, and a fed rate rise can lower long-term rates.  Mortgage rates change primarily based on: 

1. the perception of inflation
2. times of uncertainty and
3. the movement of money in and out of the stock market

When a piece of economic data shows weakness or uncertainty in the economy, rates tend to fall.  The opposite is also true.  A drop in the unemployment rate, a rise is durable goods orders, a rise in the consumer confidence index--rates go up.  Influencing factors can present themselves at any time, affecting mortgage rates instantly.  There is no "delay".  It doesn't take time to "filter down".  Reading the paper for quotes doesn't work because the information is very old by the time it gets in front of your face.  Radio, TV and billboards are not the answer because the details are always missing.  Competitive lenders, us included, can deliver nearly identical rates to each other at anytime.   Most borrowers don't ask the right questions and focus only on the rate.  Think MATH and as it pertains to you.  That's all that matters.

Is a Bank or your existing lender better than other Mortgage lenders? No! Read More Over the last several years, we have seen amazing advances in home mortgages.  Todays homebuyer has the widest variety and the most unusual types of loans ever available.  Mortgage lenders have dozens more of these loan programs for customers than any single lender (a bank).  And most of the time, we can provide better deals.  This is because we represent the WHOLESALE rates of many lenders.  These are rates and fees not available to the public.  For example, ABC Bank might be quoting you 5.5% and 1 point for a loan.  A broker representing the very same bank can also quote the same rate and fee.  The broker is probably paying NO points for that loan.  They add the point back and keep it for themselves.  They can also quote 1/2 of a point and beat the retail quote of that bank.  This is the essence of broker competitiveness.  The best deal is always changing from lender to lender.  A broker has so many sources and receives so much up to date pricing, you are more likely to save money than not.  Next time a big national lender tells you that the broker is only a middle man and therefore cannot beat their deal, tell them you know better.

The Bottom Line 
The bottom line is that there is no one source that is the cheapest.  If one lender was always the cheapest, eventually, everyone would know about it, right?  The only other way most lenders can compete with one another is to somehow convince the public that they have some "secret way" of providing lower than market rates.  The market is the market and you pay for it one way or another.

Only work with a professional mortgage company where the loan officers are skilled at the mathematics and can explain it in plain English.  Don't feel pressured, and stop looking at just rate, or just cost!  Don't gamble with something as important as your mortgage.  "DO THE MATH"

Find a Professional
How do you know if your working with a professional?  Easy.  Click here for quick questions to ask your loan officer.