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Brent Mendelson's Blog

By Brent Mendelson | Mortgage Broker
or Lender in Bethesda, MD

Mortgage quotes online. Trustworthy or not?


I was questioned over the weekend about my statement of providing a "real" quote as opposed to an internet quote. While I believe the person who asked the question knows the difference it got me to thinking if everyone else did. So here's what I meant.

To me an "internet" quote is the type that has a rate that seems incredibly low in relation to the competition. Most lenders have generally about the same rates if the criteria quoted is in fact the same. If they just have rates posted that is not a solid quote, in fact that is where the problems can start.

So when you see one that's far lower either you have;
A. Found the bank with the LOWEST rate in America.
B. Found the bank that wants to catch your eye and get you to call.
<which one is more likely?>

So what makes up a "real rate quote?"

1. Credit Score.
2, Down payment. <LTV> Putting down 40% gets you a better rate than 20% and so on and so forth.
3. Type of home. Condo? Single Family? 2 unit?
4. When do you plan on settling? Quoting 30 days for a lock is no good if you can't settle for 60 days.
5. Type of loan. FHA,VA,USDA, conventional, jumbo etc?

6. With points or without?
7. Everyone knows about the 30 year fixed. Did you know there are 25,20,15 and 10 year fixed? Plus 10,7,5,3,1, and 6 month ARMS? All different pricing. I heard someone say on Facebook today talking about his fixed rate 2.5% loan. Could be but not on a 30 year loan. What companies can put in the small print though can hurt you if you don't know whom to trust and how to catch them at their own game.

Here are just a few games I have seen lenders play in the last few months.

1. Quote a rate far below industry averages. Either with points, a too short lock period or comparing a 15 year to a 30 year rate. Rates aren't that important, what's the payment is what matters and what does it cost?

2. Imply that the rate is "fixed" when it's an ARM. It is fixed but not for the life of the loan.
3. Quoting 15 and 30 day lock periods to show better pricing when they know that they can't actually close the loan in the period advertised.


These are just a few ways that lenders attract people with rates that while lower might not always be the best deal. I hope this was helpful and I look forward to your feedback.

Thanks,

 

Brent Mendelson

Senior Loan Officer

1ST Mariner Mortgage

O-240-235-5314

C-301-412-0259

F-240-235-8236

Bmendelson@1stMarinerbank.com

Lending in all 50 states

nmls#111407


Comments

By Troy Patterson,  Tue May 7 2013, 02:02
There's another little trick you see as well. A client recently comparison shopped his ratified contract and spoke with my preferred lenders and another I'd not dealt with. The other lender promised the same rates but added a large lender credit but only if they locked that day. My client said they would go with him and said he'd like to lock. They kept us delayed on the HUD1 until the last minute and since it was a short sale any changes would have meant the deal was delayed/dead. When my client finally saw the HUD1 low and behold the credit wasn't there and he was told he didn't lock in enough time to receive the credit.
By Brent Mendelson,  Tue May 7 2013, 07:25
Troy, I didn't think of that one but yes I have seen that one happen before. It could have been caught when they sent the GFE over but people don't know how to read them sometimes properly because the government "simplfied" them and of course made them harder to understand. Good info and thanks for adding to this blog.

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