Increasingly common scenario: you call a couple of mortgage lenders, tell them what you need, and get two interest rate quotes. The next day you might contact another one, and the guys you emailed for quotes on day three get back to you later that day or the next morning. On day four, you consider the terms of all the loans, just like you’re supposed to. You look at APRs, rates, and fees. You comb through the Good Faith Estimate (GFE) and your Truth-in-Lending (TIL) disclosures like the smart shopper you are. Then you call the lender with the best deal.
Except that deal went away three days ago. The new quote is half a point more! Is your agent a scum-sucking scammer? Maybe….but probably not. See, rate quotes are based on pricing in bond markets, which are driven by the same things that cause changes in the stock markets. And you know how quickly prices change there. While lenders used to be able to offer the same rates for several days, increasingly they rarely go a full day without having to reprice to accommodate market movements. Today’s lenders also operate on slimmer profit margins and a market-based price increase can’t be absorbed as easily. The upside is that pricing improvements are also quickly passed on in the interest of remaining competitive. But a quote obtained one day probably can’t be compared realistically to one picked up a couple of days later. And until you actually lock in your loan you still can’t be guaranteed a rate.
So how do you become a savvy shopper?
First, get your information quickly. Try to get all your quotes within a short time period so that comparing them has some relevence.
Then don’t let the pricing be your only guide. Interview lenders until you find one you are comfortable discussing your finances with, asking questions of, and (yes) negotiating interest rates with. A trustworthy and reputable loan officer will want your business again and again and will be less likely to jerk you around. When you work with someone you trust, you can stop frantically checking bond market movements sixteen times a day and relax, knowing that you will be treated fairly regardless of where rates have moved when you are ready to lock your loan.
(3 votes, average: 5 out of 5)
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Thanks for the heads up. I’ve had a similar experience with car insurance. They quote you one thing, but when it comes to signing it’s a whole different story.
Two different industries, Thomas. I can’t imagine insurance sellers being subject to the same fluctuations and market forces as mortgage lenders are, but you never know. Anyway, nothing said you have to commit to them–a consumer’s best weapon is her/ her feet sometimes!
Greets! Really funny. keep working! Tnx! Saw!