Mortgage companies really tick me off. Constantly misleading the public by putting deceiving information out there to attract business.
Telling consumers that they can get an interest rate of a certain percentage should not be allowed because the simple truth of the matter is that a bank cannot quote anyone any type of interest rate until a buyer finds a home and has an accepted Agreement Of Sale and even then, the buyer needs to lock in a rate. If the buyer does not lock the rate in, their rate will then be floating free to either go up or come down until it’s locked.
By putting this misleading information out there, mortgage companies then make my job that much harder because I then have the wonderful pleasure of being the bearer of bad news having to tell an excited home buyer that the rate that they were quoted basically means nothing. If the rate was 5% the day that you spoke with the lender and by the time you get an excepted Agreement Of Sale, the rate is now be 6% now you may have to buy down your rate. It will also depend on your middle credit score. If you have a low score, expect to have a higher rate.
There is no rate to quote so stop quoting rates to consumers. Instead what the banks should be doing is educating consumers. Explaining to them how interest rates work, and how their interest rate will be determined as well as when it will be determined. Advise them of what they need to do to straighten up their credit if need be in order to be able to get the lowest rate available when they finally get an accepted offer, explain what it means to buy down thier rate and why it make sense to do so. Educate, educate, educate. Disclose, disclose, disclose. Stop misleading the public.
If you are a home buyer and you have spoken with a lender but do not have an accepted Agreement Of Sale at the time you meet with this lender no matter what the lender says, you cannot take advantage of any interest rate at that time.
What you can do is ask the lender to give you a Good Faith Estimate (GFE) which will list every single cost that you will be paying to purchase the home. Remember, it is just an estimate which means it could go up depending on price of home, interest rate, down payment, taxes and other fees. Since the lender does not know what your rate will be, they will naturally use some rate so that they can calculate your costs but its just an example. What you might want to do to be on the safe side is to ask for a few different scenarios using a low interest rate and a high interest rate so that you can see the difference.
Whenever I provide a buyer with an estimated closing cost sheet, I estimate all fees to be on the higher side to be safe and if the fees and rate are lower when they finally lock in, the buyer will have been prepared for the worst and receive the best.
Who does this misleading information wind up hurting? The consumer and it just makes the entire industry look bad and that just infuriates me.
I don’t know if my blog will help anyone but at any rate, now you know.