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“Rate Quotes” Are Worthless Prior to Getting In Contract; Misleading

We recently lost a borrower to another lender after spending an enormous amount of time educating her (this happens in our industry, and we will be fine). The borrower was steered to the other lender by a Realtor. The other lender told our borrower that he had lower rates.

There are two issues with this: (1) we had never given the borrower a formal rate quote; and more importantly (2) it is impossible to accurately quote rates until a buyer is in contract with a defined escrow period (15, 30, 45 days, etc.).

To win over borrowers, lenders can and do quote almost anything (even though they are not supposed to), prior to a borrower getting into contract. We, of course, do not engage in that practice, as we think it is misleading.

Ironically, the borrower we lost to another lender will very likely end up with a higher rate simply b/c our rates are so low. The takeaway from all this is not to trust rate quotes until you are in contract. Another takeaway is to not decide on a lender solely b/c of rates, but that is for another blog.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646