Our borrowers come to us constantly with rate quotes from other lenders, and that is all well and good b/c our rates are very low and we love competition!
What is not good though is that those quotes are often misleading or inaccurate, or they can’t be honored at all.
And worst of all from a Realtor’s perspective – those lenders often can’t perform.
Here are 7 things to consider when comparing rates.
- Does the other lender know ALL of the criteria affecting a borrower’s rate? I blogged about Ten Factors Affecting Your Mortgage Rate in February b/c far too many lenders misquote rates without accounting for ALL of the factors. Credit scores alone for example can influence your interest rate by as much as 1%!
- Lenders can quote anything before a buyer is in contract, and then claim the market moved after you are in contract. I know the owner of a huge mortgage bank that did a massive survey of clients who left them for other lenders b/c of rate. And amazingly, almost none of the borrowers actually ended up with a lower rate than the original mortgage bank quoted. I might add that lenders also play the “low ball” quote game on weekends too, when most of them can’t lock in rates until the markets open the following Monday.
- More than just rates – check the reviews! We are happy to compete on rate but there is so much more to mortgage lending than just rates. To verify this, borrowers only need to read the online reviews – that can’t be filtered. I’ve said this 100 times, but we love Yelp reviews b/c of their authenticity. In any case, the reviews prove that lenders that compete only with rates often put borrowers through hell. Borrowers have hundreds of questions as well they should, but the guys who compete with rates only are not there to answer them.
- Reputation/Getting Offers Accepted. This is something many borrowers don’t take into account at all, but sellers often won’t accept offers that involve financing with unknown lenders or lenders with bad reputations. I tell the story often of a buyer who left us for “Costco Mortgage” b/c he was convinced the rate would be lower (it wasn’t) and who then spent the next year trying to get his offers accepted in a very competitive market; sellers spurned his offers b/c of his financing and it cost him dearly.
- Get an Actual Loan Estimate or “LE.” An “LE” is the modern version of a “Good Faith” estimate with all closing costs and the interest rate in writing. When borrowers come to us with a verbal quote from another lender that seems too good to be true, it often is b/c there are substantial hidden fees or other terms that were not disclosed in the verbal quote. This is why we want to see an LE when we are competing for business, and it is why borrowers should request them (or something similar in writing) too.
- Staying Power and Follow-Ups. Heejin and I have been in the business for 30 years and 25 years respectively, and JVM proper has been surviving and thriving for 13 years – and we are definitely here to stay. Not only are we here to answer every clients’ questions and to assist all of our clients’ mortgage needs at any time, but we also have a sophisticated rate-monitoring system that ensures we spot every refinance opportunity for every one of our clients.
- How Do We Know Our Rates Are So Low? We do extensive rate surveys every week and we are always lower than almost every one of our mortgage banking competitors. In addition, our mortgage banking consultant provides data that shows the average rate across the entire industry, and our average yield/interest rate is 1/4 percent LOWER than mortgage banking industry averages. So whenever we see a low rate-quote, we always think “hmmm, I wonder what’s missing…..”
Final Points: We send out Payment and Closing Costs Scenarios based on actual interest rates that we can actually lock. We estimate rates conservatively and honestly to make sure borrowers are not caught off guard when it comes time to lock in a rate. We sometimes lose clients b/c of our honesty and it is very painful, but we will of course not bend on our integrity. Lastly, b/c rates move every day, there will always be times when borrowers can find lower rates no matter how low a lender’s rates are in general.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167