I laugh and cry when a conversation starts off with these words from a client, friend or anyone discussing mortgage rates. I laugh because I know where the conversation is heading and know the truth that I’m going to have to unravel for them… and I cry because I know where the conversation is heading and know the truth that I’m going to have to unravel for them!
I can’t keep track of how many times I’ve gone through this conversation with a client or just anyone when the subject comes up… today’s mortgage rates! I could (and probably will when I retire and have time) write a book about this and what I’ve learned in my mortgage career since 2003. You would think that not much really surprises me because I’ve seen A LOT of things in this industry, but it still amazes me when I see how misleading many lenders, brokers, and banks are with their advertising of mortgage rates.
I seem to always get randomly asked the question, “what are mortgage rates right now?”. Well the answer to that is as simple as asking, how much is a payment on a car! There are SO MANY factors that can determine mortgage rates for someone’s scenario. Everything from the obvious like credit score, type of mortgage, loan term to things that not many people realize play a role such as the type of home (single-family vs. condo, etc.), the amount of equity in the home, the state it’s located, and the seldom disclosed… POINTS!
I want to compare this to asking how much a car payment is. Here are just a few factors that could affect a car payment:
- What year, make, model is the car?
- How much is the car?
- How much are you putting down?
- Are you leasing or financing it?
- How many years is the lease or finance term?
- What is your credit score?
- How is your credit history in regard to auto loans and leases?
- On and on and on…
You can see where I’m going with this and it’s simply for a car… not a home – only the biggest purchase most people make in their lifetime! You can imagine how much plays part in figuring out mortgage rates, better yet the best rate, for a client. Having someone who will take the time to educate you on the different options and be transparent while providing probably the best service you can receive is crucial!
Please get everything documented if someone claims they can give you mortgage rates lower than what is typical in the current market. In most cases, they will tack on discount points which is essentially you buying down the rate. That could be a good or bad thing, depending on your scenario, but anyone can offer you a rate buy-down. I always give those options to my clients with an analysis to help them determine if it makes sense for them or not, never push it on them.
If you or anyone you know needs a purchase or refinance mortgage anywhere in the country, feel free to reach out. We would love to help!
-Alex Kandah – Bank of England Mortgage Troy (248) 633-8555