Mortgage consumers standing on the threshold of their mortgage lender leap-of-faith decision, would do well to holster two strategic pieces of information to gain an advantage in their lender shopping quest. Knowing who is on the other team and what the game rules are can go a long way towards leveling the playing field.
But first, some qualified pontificating; shopping for an interest rate and shopping for a mortgage are two very different things. Over time and with regular practice, mortgage consumers have become programmed to substitute “what’s your rate” as the mortgage lending proxy for “how much does it cost?”
Interest rates are just headlines, they are the bright and shiny, easy-to-read broadcast numbers that everybody sees, while all of the ifs, ands, buts and strings remain quietly below the surface. Lots of variables can change those advertised rates from bright and shiny to scuffed and bruised; credit scores, down payments, points, lender fees, lock-in periods, just to name a few, can have an impact on your interest rate and the price you pay for your mortgage financing. Different buyers with different borrower profiles can end up with very different rates.
Shopping for a mortgage is all about finding a lender that will help you navigate your way to the closing table and get you the best rate that your credit worthy wherewithal will allow. “What’s-your-rate” simply doesn’t cover enough ground.
The first thing you should know about shopping for mortgage rates is that mortgage people are salespeople first and lender people second. While you are busy trying to find out what rates the lenders you are calling are offering, the lender reps are trying to get you to apply with them. Most mortgage lender reps get paid a commission when your loan closes so they want you to make a buying decision while they have you on the phone. Lender reps know that consumers shop rates and are experienced (even trained) at fielding and deflecting these inquires without ever talking about interest rates. Everybody you talk to will sound like they have the best deal and be great to work with. Mortgage people are professional sales people, remember that.
The other thing that mortgage consumers should holster before entering the rate chasing fray is the idea that a great disparity exists between lenders and their interest rate offerings. The front end of the mortgage industry is an originating competition for new loans that is uber competitive with narrow profit margins and carefully managed costs. It is not a landscape where lenders have the ability to deliver significantly lower interest rates than other lenders. Whatever perceived disparity may exist is carefully crafted marketing driven myth.
Of course, if you make enough inquiries, it is entirely possible that you may find a lender rep offering up a rate that is significantly lower than most of the other lenders you survey. It may sound too good to be true and chances are, it is. Whatever you decide, get it in writing, our world is virtual and immediate, a couple of keystrokes and you should be able to get a rate quote with a closing costs estimate sent to your inbox. Ask for one.