Don Davis email: dond@htlnw.com Ph: 360-652-9994

I constantly get requests for rate quotes.  Here is the problem with rate quotes, it is fiction.  It does not matter what rates are today. In almost every instance you will never get today’s rates unless you are in the middle of financing your loan.  This means that if you are purchasing a home, you have all the paperwork filled out with the lender, and you have mutual acceptance on a purchase/sale agreement on the home you want.  If you are refinancing, you have filled out and signed all of the initial loan documents.

If you haven’t done any of that yet, you cannot lock a rate and will be offered the rate that is available at the time you have completed those things.

Mortgage interest rates change daily.  Sometimes several times a day and if I quote you a rate that is good right now, even a couple of hours later it might be lower or higher.

There are also several other factors that go in to what rate you might receive. What kind of loan are you getting? Is it conforming, conventional, FHA, VA or USDA?  What are your credit scores (lower scores means often higher rates)? How much are you putting down (lower LTV’s often mean better rates)? What is your Debt to Income (DTI)?  While you may be able to get a loan with a high DTI the rate may also be higher as well.

And then there are the ads you hear and read about. More times than not those are “teaser rates” (more like bait and switch).  If everyone is offering somewhere around 6% and there is this “special rate” at 5.%, there is some catch (if it seems too good to be true…).  It is usually a buy down rate that requires the interest to be pre-paid to get the lower rate.  This can be and usually is an expensive option.  It could also be (depending on the market) a ARM rate.  I’ve heard so may Ads say we have a “fixed rate” at 5%.  They didn’t say 30 yr fixed, just fixed.  With a 5year ARM the first five years are fixed.  So while it may be true that they have a 5% “fixed rate loan”, it is misleading and most people think it is a 30yr.

I can give you many more examples but I think you get the point.

The reality is, find a lender that you trust and have confidence in to help you get a good loan with a good rate.  With the volatility in the rate market changing daily, take your mortgage professional’s advice and lock at the rate that is good for you when you can.  But if you base your home loan shopping for who quotes you the best rate before it can ever be locked in, you are basing your most important financial decision on the wrong thing and you will surely be disappointed when you really can lock in your rate.

 

Don