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Financing in 90046 : Real Estate Advice

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Wed Apr 7, 2010
Sky Minor answered:
@Steve provided an excellent answer. Good job Steve!

I usually oversimplfy my answer to this most crucial of all questions involving real estate:
Mortgages are like gasoline. They're pretty much the same everywhere. One might pay $.06 higher per gallon at Chevron versus Arco but the prices at all vendors are always very similar. If one drops their prices, then every driver will flock to them until the others must drop their prices to compete. The free market dictates prices in Gasoline and most other things we buy.
Mortgage lenders are the same way. If one of them dips their rates down then borrowers will flock to them, and the other lenders will have to keep up to avoid losing out on business. It is in the best interest of the lender to give you the highest rate possible but by doing so they risk losing you as a borrower. They have to lend money to stay in business, so they must compete by lowering their rates. As a broker, I look at rate sheets from a dozen banks daily and they are all within .25% of each other's base rate. Where the lenders differ though is their rate "Add-ons". Some will penalize you for lower credit, property type, employment history, down payment seasoning or anything else they choose. It's up to the broker to know which lenders will offer the best rate for a particular situation. Most bank lenders can only offer the rate that their institution has, and if that institution adds on .875% to the rate for any borrowers with less than four years employment history then your 5% just went to a 5.875%. Don't worry that much about it, with the new mortgage guidelines as of January 2010 the borrower is made very well aware of all charges to be incurred in the loan and none of them are allowed to change. If they do, the lender or broker has to pay the difference.
To see current rates, I recommend Bankrate.com.
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