Tuesday, August 2, 2011

How to Find the Best Mortgage Interest Rates

This week's winning question was submitted to us by Ed Coulter of Vista Homes Real Estate. Ed receives a $25 Starbucks card and gets his contact information sent to the 6,600 people on our contact list. We also list his contact info on our blog (10,199 visits for the first 6 months of 2011) and on our blog at Active Rain, a real estate blog with more than 210,000 members.

Ed's contact info follows:

Ed Coulter, GRI
Graduate of the Realtor Institute
Vista Homes Real Estate

Ed's question is: "What is the best web site to look at for real-time interest rates?"

Here's the answer: There really is no good site for real-time loan rates, and here's why. Rates are posted on thousands of web sites. However, there are many adjustments to the rates that are never shown to the public. These adjustments are known as "loan level pricing adjustments" and they can affect the interest rate tremendously - sometimes by as much as a few percentage points.

Here are some examples of the things that affect rates:

  • Rate lock period
  • Occupancy type (primary residence, second home, or investment property)
  • Amount of the loan
  • The borrower's credit scores
  • Amount of the down payment
  • Property type (single family residence, townhouse, or condo)
  • Subordinate financing (is there a second loan?)
Unless a lender asks a borrower for all of this information (and much more), they can't possibly provide an accurate quote. The web sites that list rates (real-time or not), are either lead-generating web sites that sell the borrower's contact information to multiple lenders, or bait and switch sites intended to get the borrower to call. All the large lenders, and many smaller lenders, employ these tactics to get customers.

The very best way to get an accurate rate quote is to use lenders who tell you that they cannot possibly give you an accurate rate quote without gathering the information listed above and more.

Getting a loan approved is easy - if you know what to do. The Mortgage Experts know what to do!!!

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