We recommend reviewing the below items closely when comparing quotes:
I. Closing Costs.
Our rates tend to be very low compared to most other mortgage banks and we are also very honest and up front about ALL potential closing costs – with respect to both recurring fees (interest, property taxes, insurance, etc.) and non-recurring fees (one-time fees such as title, escrow, appraisal, etc.). The vast majority of closing costs are imposed by third-parties, such as title companies and appraisers, and are costs which we have no control over. Many lenders, however, fail to disclose all the potential closing costs with their rate quotes in an effort to appear more competitive. When comparing quotes, if one lender’s closing costs are significantly lower, make sure you know whether they are omitting third party fees.
II. Lock Periods.
Another factor to consider is the lock period. Interest rates can be locked in for 7 days, 10 days, 15 days, 30 days, 45 days or 60 days (or even longer in some cases). The shorter the lock period, the lower the rate. Some lenders will give you rate quotes for very short lock periods to appear more competitive than they actually are. This is misleading, however, when you have a 30-day escrow for example but the rate quote is for a 10-day lock. If the lock period is only 10 days but your close date is 30 days away, you could not lock in a rate for 20 days at least – and the market could move significantly in that time.
III. Can their quoted rate be locked now?
When potential buyers are shopping for loans but are not yet in contract, many lenders quote under market in an effort to lure buyers into their system. They do this because they know they will not have to honor their quote in the short term because the buyers are not in contract on a home yet. This is because you cannot lock in your rate until you are in contract with a property identified (in most cases). Then later when you are in contract, those unscrupulous lenders can simply claim that rates went up since they last quoted you. At JVM, we will always only quote rates we can actually lock.