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.
Senior Loan Officer
1ST Mariner Mortgage
Lending in all 50 states