How does a borrower looking for a mortgage loan find who “really” has the lowest mortgage rates if there are over 25 million pages online screaming that “they” have the best mortgage rates?
What do I mean? Type “best mortgage rates” in Google and see what you get. Today, February 8, 2010, your friendly lenders are saying they will bless you with rates ranging from 3.48% to 5.25%. Oh me oh my. What to do now? Do you suppose it makes sense to call the 3.48% advertiser? After all, they say they have a rate that is almost 2.00% lower than the other guys.
Is it possible that one lender will really give you a mortgage rate that much lower than other lenders? The answer is no – not if we’re talking about a mortgage with the same terms and conditions. It’s just not possible.
The Internet is a haven for those looking to drive traffic and phone calls by advertising artificial rates. But what’s even more problematic is that countless web sites are not “lender” sites at all. Instead, they are lead generating businesses whose only goal is to capture your name, street address, email, phone number, etc and sell it numerous times to whomever wants to buy the information. So, borrowers, tread with much caution.
Most of the crazy low rates online are not for a 30-year fixed rate which is what most borrowers are looking for. Some lenders are advertising adjustable rates and that’s all they offer. And more than a few are ONLY advertising 15-year rates which the borrower uncovers later in the process. (As you may know, the 15-year rate tends to be about a half point lower than the 30-year rate.) It doesn’t take a rocket scientist to figure out why a lender or lead generator would advertise a 15-year rate – as opposed to the 30-year rate which most borrowers want.
Mortgage seekers can avoid some of the aggravation and misinformation by reading the fine print. Some of it is downright scary. One site quotes low teaser rates but at the end says, “We arrange but do not make loans.” Hmmm.
Another site says, “Not all consumers will be matched to a lender that is able to supply the advertised rates.” What the heck is that?
Read the advertisements below. They are all from known lenders or lead generators that are very prominent on the web AND they have numerous sites with similar names. See all the reasons below why you don’t qualify or might not get that low rate when all’s said and done.
Borrowers using the Internet for rate searching face a big, tough uphill battle. My hands down advice is to search for a professional, not a rate quoter. Where do you start to figure this out? Well, if the focus of the site is to lure you in with suspicious rates and very little helpful information, you should be leery. And let’s not forget it is impossible to know who has the lowest rates. The market is too big. Same thing goes for anything we buy. But if we can get our transaction completed at a “fair market price” then we won the game. Searching for the phantom lowest rate is a mission impossible. That is especially so in this market where mortgage rates can change twice a day or more.
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Take a look at this Internet Mortgage Rate Advertisement
Rates from 3.59% APR*
*About Our Advertised Rates
Fixed Interest Rates
- Our advertised fixed interest rates are based on a 15-year fixed-rate loan with a loan-to-value ratio of less than 80% and are current as of Jan 18th, 2010. The Annual Percentage Rates (APRs) of the loans will be slightly higher.
- Loans may carry closing costs and/or origination points. Rate and terms offered may vary depending on your credit history and other qualifications, amount of equity in the property, property location, type of property, and other factors. We arrange but do not make loans.
Adjustable Interest Rates and Advertised Payment Terms
- Our advertised adjustable interest rates are based on a 5/1 ARM (Adjustable Rate Mortgage) with a 30-year fully amortizing term and are current as of Jan 24th, 2010.
- For a $200,000 loan, the initial interest rate is 3.875% for 5 years with 1.875 discount points due at closing. There is a 3.59% APR with an initial monthly principal and interest payment of $940 for the first 5 years. After a period of 5 years, the potential interest rate is estimated at 3.25% with an estimated monthly payment of $867.
- An Adjustable Rate Mortgage (ARM) is a mortgage with an adjustable rate that is amortized over 30 years.
- Your interest rate is fixed for the first 3, 5, or 7 years of the loan repayment period, depending on the type of ARM you have.
- After the initial fixed-rate period, the interest rate could adjust every 12 months, depending on the product and the financial markets.
- Interest rate adjustments are capped at 5% above your initial rate and 2% per adjustment period. In other words, if your initial interest rate is 4.5%, your rate will never be higher than 9.5%, and never rise more than 2% per year.
- Actual mortgage payment will vary based on your situation and the current interest rate when you apply.
Not all consumers will be matched to a lender that is able to supply the advertised rates.
- Interest rate quoted assumes a FICO score of 720 with a maximum loan-to-value ratio of 80% on a primary residence.
- The actual interest rate, APR and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors.
- May not be available in all states.
- Available rates and payment terms are subject to change daily without notice.
- Payment amounts shown do not include taxes or insurance.
- The Annual Percentage Rate (APR) is variable and is subject to increase or decrease, so your payments may increase or decrease each year.
Here’s a Second Example of a Rate Advertisement
“Named Lender” is engaged in the business of providing content for mortgage shoppers and is not acting as a mortgage broker or mortgage lender. The information provided by you to “Named Lender” and its partners is not an application for a mortgage loan, nor is it used pre-qualify you with any lender. If you are contacted by a lender or broker advertising within our or our partner network, your quoted rate may be higher, depending on your property location, credit score, loan-to-value ratio, debt-to-income ratio, and other factors. “Named Lender” does not guarantee that the rates or terms offered and made available by participating Providers are the lowest rates available in the market or the best terms available, and not all Providers in our network offer the interest-only products that are advertised here. The interest-only products are not available in all states or to all consumers. Completing a form does not obligate you to purchase a service or product from the Providers, nor does it obligate a Provider to offer to you any particular service or goods about which you may have inquired.
Additionally, the content on our website (the “Content”) is supplied in good faith using references and sources deemed reliable; however it is published strictly on an “as-is” basis. The operator of this website and the author hereby disclaims any and all express or implied warranties to the maximum extent permitted by law. The Content is provided for informational purposes only and is not to be construed as financial or legal advice. Everyone’s financial circumstances are unique. You are urged to consult multiple informational sources and a professional advisor before making any decisions affecting your personal finances.
* Mortgage Rate of 4.0% FIXED is for qualified borrowers for a 15-year fixed rate mortgage to refinance an owner-occupied, one-unit, single family dwelling for a loan of $165,000 to $417,000 ($165,000 to $625,500 in Alaska and Hawaii). If you are contacted by a lender or broker advertising within our network, your quoted rate may be higher, depending on your property location, credit score, loan-to-value ratio, debt-to-income ratio, and other factors. Not available in all states. Not available for all credit types. Not all service providers in our network offer this or other products with fixed rate options.
** With principal amounts of $100,000, $150,000, $170,000, $200,000, $350,000, or $500,000 the 4.65% interest rate has an APR of 7.771, 7.677, 7.656, 7.631, 7.572, or 7.548 percent, respectively. This is an introductory variable interest rate on a first priority loan that is fixed for the first 6 months then is subject to increase no more than 1% every 6 months thereafter (until rate has caught up to fully indexed rate). See Terms A 30-year first priority loan with an introductory interest rate of 4.65 percent in the principal amount of $100,000, $150,000, $170,000, $200,000, $350,000, or $500,000 (APR of 7.771, 7.677, 7.656, 7.631, 7.572, or 7.548, respectively), would require payments as follows, assuming there is no change in the Index used to calculate your interest rate over the term of the loan: (i) the first six monthly payments of $385.42, $578.13, $655.21, $770.83, $1,348.96 or $1,927.08; (ii) the next six monthly payments of $468.75, $703.13, $796.88, $937.50, $1,640.63 or $2.343.75; (iii) the next six monthly payment of $552.08, $828.13, $938.54, $1,104.17, $1,932.29 or $2,760.42; (iv) the following 42 monthly payments of $627.25, $940.88, $1,066.32, $1,254.50, $2,195.37 or $3,136.25; and (v) the remaining 300 monthly payments of $740.75, $1,111.12, $1,259.27, $1,481.50, $2,592.62 or $3,703.74 at an assumed interest rate of 7.527 percent (APR of 7.771, 7.677, 7.656, 7.631, 7.572, or 7.548 percent, respectively) which represents the adjusted fully amortized payment for the remainder of the loan. To be eligible for this program borrowers must meet applicable credit requirements, including a FICO score of at least 620.
Take a Look at this Interesting Twist on Locking the Rate With This Lender
“Prior to ……. processing your rate lock, we must review your income and asset documentation. In some situations it may also be necessary to complete your appraisal prior to locking your rate. You can request rate lock online, but your lock will not be confirmed until …….. has determined that there is a high likelihood that your loan will be approved based on the information and documentation that you have provided.”
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Whew. I’m exhausted from all this fine print.
When you place your application with me, you know we are a lender, not someone selling your information. I can never guarantee that we have the lowest rates, as nobody can. I can guarantee solid, proper, up-to-date advice from a veteran in the mortgage business with rates and costs that are definitely competitive across the board for all programs.
To stay completely up-to-date on all the pending mortgage changes, to see how they will affect you, and get news about interest rates and programs, just read my weekly updates - Click for free email alerts.
{ 1 comment… read it below or add one }
I look at this as the same old bait and switch thast happens in many different businesses. The buyer must always beware. Anybody buying anything based on false advertising like this is just asking for trouble. We all know if it sounds too low to be true, it probably ain’t.