Mortgage quotes can be deceptive. When shopping for a mortgage you may receive different rates from different lenders.
Rates change every day, sometimes during the day. The interest rate you qualify for depends on your credit score, the type of loan you want, loan to property value, and other factors. The best mortgage professionals always discuss needs and financial situation before quoting rates.
Rate quotes are constantly changing. Market Forces, Credit Scores, Loan to Value all have a material effect on the rate that you will be able to obtain. The loan officer needs all available information in order to provide a realistic quote.
Always get a good faith estimate with every rate quote.
Remember to look at your payments when asking for a quote. Rate is much less important than the total amount you pay per month for the amount of value the loan creates for you. For some people, that means the monthly savings from debt consolidation e.g. paying off their credit cards, for others that's the appreciation on home improvement, and if purchasing a new property the improvements in long term net worth and quality of life for you and your family.
A good loan originator will never quote a rate over the phone without first thoroughly interviewing the caller to ascertain his or her specific needs and qualifications. It is the loan originator's responsibility to explain the importance of being pre-qualified to a caller before considering rate. The lowest rate is irrelevant if you do not qualify or the loan program does not fit your particular needs.
A mortgage quote should only be used for a comparison between loan programs. The final rate lock will determine the rate you will receive. Receiving rate quotes without first submitting your entire loan package (income, employment, assets, credit) will only serve to give you a guide as to what the rates are on that day for the most qualified of borrowers. When reviewing rate quotes, pay close attention to the overal cost of the loan as well. Not all quotes are created equally.
When comparing different interest rates quoted by various lenders, it is more important to compare the annual percentage rates (APR). The APR takes into account not only the interest rate of the loan, but also all other lender fees associated with the loan. A mortgage with an interest rate of 0.25% lower does not necessarily mean it is the most inexpensive loan if it requires a huge discount point.
A quote is just a quote and not a commitment to lend.
When obtaining quotes from a mortgage broker get them to compare programs using a calculator or spread sheet, primarily one where you can plug in how many months you plan on staying in the property before refinance or selling, where you can see the programs side-by-side, you will be able to determine the higher rate with less closing costs will sometimes benefit you more. This is especially true if you plan on moving in a few years or refinancing soon. Moreover in this case it would be better for you to go with a Hybrid program where the rate is fixed for a certain period then adjusts after that period of time.
It is important that you provide your lender with accurate and up-to-date information when requesting a mortgage quote so as to ensure maximum accuracy. Keep in mind, it is nearly impossible to provide difinitive rate quotes unless the necessary income documentation and credit history have been furnished to your lender.
It is vitally important for the consumer to know that Loan Quotes are subject to change without notice, and may be better or worse than the advertised quotes depending on loan amount, lock-in period, loan-to-value ratio, and credit profile. Rates can change up or down several times in one day. Also keep in mind that rates and points will be higher for investment property.
The rate quotes will vary based on the amount of time that you will need the loan locked for. For example if you call for mortgage rates most will give you a rate that is only sufficient for 30 days which you must have your loan closed and/or funded by that date. You may need a longer lock in period for several reasons such as a purchase which may not close for a longer period of time or market conditions may prohibit you from closing in 30 days, all of which may affect your rate.
A mortgage quote consists of many different variables not just the interest rate. The type of loan program is just important because borrowers should plan for the future. Borrowers should look at all the costs associated with getting a loan. A borrower needs these three items when examining a mortgage quote.
The best thing to do if you simply want a rate quote is to provide the lender as much information as possible and have a good understanding of your credit history, be sure you understand that without a lock in agreement that is all you have is a quote.
Asking for an interest rate and fee quote is the first thing a potential borrower will ask. While these are very important questions they are not the most relevant to the beginning stages of mortgage financing. By example, if you knew of a auto mechanic that your brother or sister uses who is has been reliable, trained and experienced, and trustworthy, would you not first go to this mechanic, even if they were slightly more expensive? The old adage of, "you get what you paid for" may apply with mortgage financing also. If all that is considered in finding home financing is the rate and fees you run the risk of foregoing more important issues of getting a loan. Thus, the first thing a potential borrower should do is seek references. Find out what others have experienced about the lender and the individual in whom you seek potential business with. Paying for reliability, experience, and honesty is worth its weight in gold!
When comparing rate quotes its a great idea to use 3 way calling. Have both of the brokers on the phone at the same time. When doing this you must make sure you control the conversation with closed ended questions. However its going to be difficult for either of them to try to get something past you with there competition on the other line. Gather your facts then call back the broker you would like to proceed with.
Understanding that a rate quote is nothing more than a snapshot of a particular programs interest rate is critical for a customer to understand. Many economic factors determine whether interest rates go up or down and lenders will update their rates daily or even multiple times per day. The decision to lock a loan should ultimately be the consumers however your mortgage broker can be extremely valuable in deciding if you should lock now or wait based on industry forcasts.
In most instances, the exact interest rate can not be determined in the first or second contact with the broker. Be sure to ask about any other programs avaliiable as well, often borrowers focus too much on rate and not which program is in their long-term financial goals.
Loan qoutes can also vary from day to day. It is a good idea to get qoutes within a 24 hour period.
It is sometimes helpful to use the 30 year conforming prices to start. Often times borrowers see television specials offering rediculous rates, so to bring them down to earth, you can tell them, for example...if your credit score was over 740 and you are able to document everything on your app, then you would potential qualify for 'X' rate. However, since you have this and that account in collection, a 621 score, and have to state your income, you are in a different bracket in terms of receiving rates, and would most likely be in the range of A to B %. This way they see the conditions you need to get the best rates, and they clearly see why they do not have access to them.
With predatory lending in all of the headlines and all over the news you really need to feel comfortable and be able to trust your mortgage financing expert. You can probably shop around and recieve 10 mortgage quotes and I bet you they will be all over the place and you will be lucky if 2 are exactly the same. Some mortgage companies are simply going to tell you rates that they most likely know you won't qualify for just to try and get you in the door. Some companies are going to tell you rates that are conservative to be on the safe side. Anyone can quote rates but it takes a true mortgage professional to actually obtain the best rate for you and your unique situation. Therefore unless you complete application with 2-3 mortgage professionals it will be hard to really know who has the best rate and payment for you. Wait until you have a GFE, Good Faith Estimate, from the 2 or 3 companies so that you can compare "apples to apples" and the mortgage quotes as a whole (rates, payments, fees, etc...).
Always give your loan officer complete and accurate information. Otherwise the rate you can qualify for can be greatly different from that initially quoted. For example, a credit score of 720 will get you a much better rate then a credit score of 580. Also, a lender that has a great rate for a 720 credit score may not have one of the better rates available for a credit score of 580.
Some loans can be done in a more spedily manner especially if most documentation is ready to go. If this is the case you may receive a slightly better rate by allowing your lock period to be shortened from thirty days to fifteen days.
Remember your rate is not guaranteed until your broker locks your loan. Your mortgage broker will be able to let you konw once the loan is locked and your rate is guaranteed.
Online mortgage quotes are immensely time saving in comparison to getting the quotes through other sources.
Rates once locked only remain so for a specified period of time after which they will once again float with the going market rates for your loan program, and may incur a fee under certain circumstances.
Many borrowers call lenders or search the internet for a rate quote when they are in the market for a mortgage. A borrower must understand however that, until they are approved by an underwriter for their loan and the loan is locked by the lender, the rate is never guaranteed.
Many borrowers become upset at loan officers who tell them that they cannot quote a guaranteed rate in the early going. The fact is that such a loan officer may be more honest and better to deal with than one who leads a borrower to beleive they are guaranteed to get a certain rate from the outset.
One thing to avoid are rates quoted in newspaper advertisements. Rates change daily and the rate that you see advertised may not be what the actual rate is.
Although I am frequently asked by borrowers "what will my interest rate be" when I am pre qualifying a loan I never will quote a rate. I will respond by saying one of the following:
1) Rate will be determined by the lender after they have pre qualified the loan by reviewing your credit and application.
2) Rates change daily. Since it takes at least 24 hours to get a completed pre qualification from the lender I could not possibly know what tomorrow's rates will be.
Always remember your rate can vary until locked.
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Information listed above is to be used for educational purposes only and is not guaranteed