What Are Your Rates????

Like most mortgage professionals, I’ve heard this question countless times over the years from someone calling around and rate shopping. It’s really the wrong question. Mortgage brokers are like any other profession- there are the good ones who know the lenders’ underwriting guidelines, how to correct errors on credit reports quickly, etc, and where the lowest rates are.

There is also the “less than competent/ethical” mortgage professional who will cost you more than the highest rates you could have chosen.

One of the biggest misconceptions of the mortgage public is that if they call everyone in the phone book they will find that “really, really, great rate” that no one else has. What they usually find is someone who does a bait and switch (quotes a rate and fees, or specific loan program, and then when you go to sign the loan docs, it’s not what you were quoted) or the loan officer is betting that rates come down by the time your loan is ready to close.

The Reader’s Digest condensed version is this: the secondary market on Wall Street sets interest rates. To put this simply, calling for rates is like calling up stockbrokers and asking what their price on IBM stock is and what their fees are to buy it. There will be a SLIGHT fluctuation depending on the time of day for the price, and from broker to broker for the fees, but if everyone is quoting IBM at $80 and one broker quotes it at $60 shouldn’t you be nervous about the $60 quote?

Fixed interest rates for conforming loans (under $300,700) as of 11/20/02 are:
30 year fixed: 5.5% (APR 5.78%) monthly payments are $1,707.34/mo.
15 year fixed: 4.875% (APR 5.339%) monthly payments are $2,358.38/mo.