2 additional reasons you may find, are that:
1. Due to regulatory issues, each State will price out different from one another.
2. Bank Rate.com is more or less an Advertisement. Meaning that anyone on there is likely to be 'Low Balling' a figure to entice you to come to them. I'm not saying their rates aren't correct. But they may not have any risk factors included in them. for example
95% purchase vs under 80%
Credit scores of 660 vs. 800
These can easily either raise a rate or the costs associated with obtaining the rate.
Also Rates are not the Big Worry anyhow. It's the Closing costs associated with them.
on a typical 30 year loan rates can go from 3.5% with nearly 4% of the financed price in closing costs to 4.25% with nearly 0 closing costs. you need to do the math but it will be easy to see in most cases with rates so close together, Low and 0 Cost loans are smarter financially.
Example 200k home 5% down leaves 190k to finance. you could get the "Water Cooler" rate of 3.5% but you would have to cover 7600.00 in closing costs (+ escrows) as well as your 10k down payment. (Exception - you can get your agent to have the seller pay 3% closing costs - then you would only pick up the remaining costs)
if you do your out of pocket costs as a part of the financing you can see the savings is NOT always worth the additional costs
Example - same home 200k minus down payment leaves 190k add back in 7600 for costs to bring you to
197600 at 3.5% = 887.31 base payment (not including taxes, Insurance or PMI) vs. a 0 cost loan at 4.25
190000 at 4.25% = 934.69 base payment (not including taxes, Insurance or PMI)
yes there is a 47.38/month savings but divide that into the 7600 it cost you to get it.
7600/47.38 = 160.4 months to break even that's nearly 13.5 years
Statistically, you are more likely to sell or refinance in the next 5 years on average. That would mean throwing away 8.5 years of recovery on that money or about 4800 of it still unclaimed.
Again this is if You are Paying for it. If you can get the Seller to front for Closing Costs then get the lowest rate you can (with out you bringing anything else to the table)
Anyhow thatâ€™s my suggestion. I hope that it gives you a few extra things to think about. If you need any other advice donâ€™t hesitate to call
Senior Mortgage Consultant
Cornerstone Mortgage Group
6151 Powers Ferry Road NW
Suite 610 Atlanta GA 30339
Toll Free 866-430-0970