1. When shopping for mortgage rates the American public has been very misinformed. Many people believe that one company is trying to rip them off while one is trying to give them the best deal of the century. Its so easy to believe this when you hear Lending Tree ads all day on the tv and radio talking about having banks fight over you to give you the best mortgage rate. Since you are not in a big hurry you put your name on 3 or 4 different websites like Lending Tree and Lower My Bills where you will be expecting a phone call from a couple different lenders.
2. Depending on what time of day you put your information on those websites you could literally be called within 15 minutes from somebody from a mortgage company. Typically the larger companies will be the first to call because of agreements with those web sites that they get first crack at selling a new loan because they buy so many leads.
3. Depending on the skill level of the person calling you it could take anywhere from 5 minutes to an hour to find what you are looking for. After the normal greetings the first thing that comes out of your mouth will be “what’s your interest rate.” This is the one thing that mortgage bankers and mortgage brokers hate hearing. They hear it on every call and it gets old because they know how it works. What should be going on after this question is the mortgage officer should say “Well why do you want to refinance your home, we can get into interest rates later. With so many different programs to choose from it would be irresponsible to just quote you a rate when there are so many rates.” This is when you are probably surprised because you thought each company only has one rate. Most mortgage companies have about 20 different kinds of mortgage or loan programs and each come with about 12 different interest rates that day. There is the zero point interest rate (market rate for the day) and then there are rates where you can buy down the rate. The term buying down the interest rate is an option for you to pay money up front (not out of pocket but commonly rolled into the loan) for a lower interest rate. That’s right you have options.
4. A good mortgage banker or mortgage broker will spend the extra time to try to see what it is that you are really trying to achieve financially. Is it home improvements, college tuition, cash out to roll in some debt or are you just trying to save money?
5. You are probably wondering why I am writing so much about this topic in which a simple answer about shopping for mortgage rates would do. You know there’s a catch coming and its going to come from the mortgage banker. If they can tell that you are not really serious about buying a house or refinancing your loan than they might just throw an interest rate at you and see what you do. If after this time of talking the loan is making sense for you and you sound interested the mortgage broker is going to keep you on the phone for as long as they can possibly without even talking about rates or costs or anything. Just them trying to get to know you and build rapport. This is good salesmanship actually so don’t get mad at your mortgage person.
6. So now the mortgage banker turns off the charm and goes into business mode and is ready to ask for your business. If the mortgage person is a good closer he will answer your questions and ask for the business again and again and again. Some companies train their mortgage officers to do this and actually all businesses should. It gets out your real objection to not moving forward. 95% of the time you are not moving forward because of the interest rate and in the back of your mind you know that you are expecting a call from 3-5 more mortgage companies and you know your only gathering information right now.
7. So let’s say this person you were talking to just spent an hour of your time trying to get to know your situation and found a loan that works for you and hits your goals but you do not budge. You tell this mortgage person you are waiting until you get all of the calls and it does not matter how long it takes but your not moving.
8. The reason why you want to shop for mortgage rates in a 24 hour time period is this. To fairly be able to compare rates against competitors you need to get all of that info that day. No waiting til tomorrow or when somebody is supposed to call you back in the morning. What you are doing is making it unfair really on yourself. Now you are going to have to call all of those companies back the next day and get all of their info again. The reason is because mortgage rates move on a daily basis. So what some mortgage company said the day before is not going to be the same thing today (more than likely). Interest rates for mortgages for the most part are based on the 10 year Treasury Bond.
9. What you want to do is be polite to all of these mortgage companies that you are in contact with. The best mortgage companies out there like Countrywide, (just cause they have been in the news for foreclosed homes does not make them bad) Citibank, and Quicken Loans will have all of their programs and mortgage calculators ready and can lock you in on an interest rate and get mortgage documents including a Good Faith Estimate and Interest Rate Disclosure Agreement out to you within the matter of minutes. These documents will provide you with a piece of mind knowing that you have at least taken care of that. If somebody says they will have to call you back tomorrow its probably that they do not value your business or they are a mortgage broker and cannot lock you in on an interest rate. This is important to know. Mortgage brokers can send you documents with an interest rate on it but since they are not the lender those documents are kind of like saying we can hopefully offer you this mortgage if you application is accepted by the real lender doing the loan.
10. Most interest rates that mortgage companies go off of will be updated every morning when the stock market opens. They usually keep them the same through out the day unless something crazy happens on the market. This causes the Chief Financial Officer of the company to not let anybody lock in mortgage rates until things cool down. Also, if you do commit to a lender and they lock you in on an interest rate you are locked into pricing for that day. So you can switch it if you want to higher or lower interest rates. The catch is let’s say you lock in your rate one day and the next day interest rates go down by .25%. The lender that you committed to is not going to tell you this but you are probably still going to receive phone calls from other mortgage companies saying that rates dropped and they can lock you in with a better rate. It’s really all a game and all you can do is hope that you are well informed. Don’t think that mortgage companies want to charge you higher rates. They know you will not go with them if they do. Do some research on mortgage companies before you put your name on one of those sites. There is plenty of free information on major web sites about the best mortgage companies. Get at most 3 banks and call them yourself. Get all of their rates and fees that day. You will probably see that they are all relatively the same. Go with the person who treated you the best and really wanted to know why you wanted a new loan. Shopping for mortgage rates in a day will also save you from the headache of having to answer to a bunch of companies and having piles of Good Faith Estimates that don’t mean anything now because they are a day old.
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