Shopping For a Loan??

How Do I Get The Best Rate?  It is NEVER about the best rate.  It is about the best MATH, period.  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's not the real issue either.  There is a break even point to contend with when paying points and fees, tax deductions to figure out and your available cash.  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 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 so many 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.  How about the lowest APR?  Often, the more points you pay, the lower the rate and APR.  True, but not the answer.  Get your loan officer to take apart each rate and fee quote to find out what the best MATH is for you, period.  It only takes a few seconds for a professional to do it.  After that, it's your decision.
 
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 at 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 the lending business, a rate change can also include 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 ¼ point.  That is a rate change to lenders.  Many times a fed rate cut can cause mortgage rates to go up.  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--that's it.  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 in durable goods orders, a rise in the consumer confidence index--rates go up.  These influencing factors can present themselves at any time, many without warning, affecting mortgage rates instantly.  There is no "delay".  It doesn't take time to "filter down" like some people think.  Reading the paper for quotes doesn't really work because the information is old by the time you read it.  Radio, TV and billboards are not the answer because the details are always missing.  They just want to get you on the phone.  Competitive lenders can deliver nearly identical rates to each other.   Most borrowers don't ask the right questions and focus only on the interest rate.  Try to think MATH and as it pertains to you.  That's all that matters.
 
Is A Direct Lender Better Than A Mortgage Broker?  No.  First, if a couple of lenders were always the cheapest, everyone would eventually know about them, right?  Over the last several years, we have seen amazing advances in home mortgages.  Today’s homebuyer has the widest variety and the most unusual types of loans ever available.  Mortgage brokers have dozens more of these loan programs for customers than any single lender.  And most of the time, they can provide better deals.  This is because they represent the WHOLESALE rates of these lenders.  These are rates and fees not available to the public.  For example, ABC Bank might be quoting you 5.875% 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, charge it to you (just like the bank) and keep it for themselves.  They can also quote ¾ 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 source to source.  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, get it in writing.

The bottom line is that there is no one source that is the cheapest.   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.  Work with a mortgage professional that can explain it all in make sense terms.