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I called my bank about possibly doing a refinance on my mortgage. I was told the rate they can offer me right now is 4.875% for a 30 yr fixed. But when I look at their home page, they have their rates for a 30yr fixed listed at 4.375%. I was just talking to the rep about it to get an idea of how the process works, we didn't get into my credit score or equity etc...so why the difference in the rate? She told me that the rate of 4.375% has 2 points built in but it doesnt' say that on the website. Am I missing something? I am new to the process so wondered if she was telling me nonsense or not.
You need to get a Good Faith Estimate (GFE). Lenders always put information that grabs your attention and the 4.375% grabbed your attention. You called, they might get new business. If you want full disclosure as to how to obtain that rate, you must move forward and have your credit pulled and get a GFE which spells it all out.
Some rates quoted include the lender paying your closing costs instead of you paying them out of pocket or putting them on top of you loan amount.
I just got a 3.75% fixed, 15-year rate, with zero points and zero origination fees. I am refinancing, and qualify for the Obama no-appraisal required refi, so my total closing costs on a $200,000 refi is $1,900. That is a great deal to me! Closing in less than 30 days too!
You need to get a Good Faith Estimate (GFE). Lenders always put information that grabs your attention and the 4.375% grabbed your attention. You called, they might get new business. If you want full disclosure as to how to obtain that rate, you must move forward and have your credit pulled and get a GFE which spells it all out.
Some rates quoted include the lender paying your closing costs instead of you paying them out of pocket or putting them on top of you loan amount.
I would not say that lenders ALWAYS do the Bait-and-Switch. Lenders do have to adere to some stringent rules these days. Rather than going through the process and having your credit pulled, call several lenders to find out which company will offer the competitive rate you are looking for. Then, when you feel comfortable with that lender, schedule a time to meet with a mortgage professional to review the process and then, move forward on getting your credit pulled and getting the Good Faith Estimate on the rate that you agree on.
Keep in mind that lenders make their money not only on the upfront fees but on the yield from the rate given to you. The Good Faith Estimate will show you how much that lender will be making on that rate. In this case, the lender was hoping to make a little more on the 4.875% rate.
I would not say that lenders ALWAYS do the Bait-and-Switch. Lenders do have to adere to some stringent rules these days. Rather than going through the process and having your credit pulled, call several lenders to find out which company will offer the competitive rate you are looking for. Then, when you feel comfortable with that lender, schedule a time to meet with a mortgage professional to review the process and then, move forward on getting your credit pulled and getting the Good Faith Estimate on the rate that you agree on.
Keep in mind that lenders make their money not only on the upfront fees but on the yield from the rate given to you. The Good Faith Estimate will show you how much that lender will be making on that rate. In this case, the lender was hoping to make a little more on the 4.875% rate.
Actually, the GFE from the Bank will not disclose what they are making. Banks have their own set of rules and do not have to disclose the SRP or YSP they are making. Only brokers have to disclose this information.
I would suggest to the OP to contact a broker. Brokers can typically get you a much better deal than working with a direct bank.
I would not say that lenders ALWAYS do the Bait-and-Switch.
I never said they do a baint-and-switch. However, that rate may be tied to a 720+ credit score with 20% down. The OP might have a 650 with 5%. He needs to know what makes up the advertised number else he might never be able to get that actual number. It's only a bait-and-switch if the advertised rate says something about "guarantee" or "all consumers can get this rate" or something like that... or even if he called and the person said, "Oh, yes, I can get you that rate, no problem" and then comes back with completely different terms.
Actually, the GFE from the Bank will not disclose what they are making. Banks have their own set of rules and do not have to disclose the SRP or YSP they are making. Only brokers have to disclose this information.
I would suggest to the OP to contact a broker. Brokers can typically get you a much better deal than working with a direct bank.
VictorBurek, you are not correct. A broker will not necessarily do better than a broker. I have worked both as a mortgage broker and a mortgage banker, and I can attest that I have been able to give better rates and lower closing fees for my clients as a mortgage banker. I would never go back to being a broker.
I called my bank about possibly doing a refinance on my mortgage. I was told the rate they can offer me right now is 4.875% for a 30 yr fixed. But when I look at their home page, they have their rates for a 30yr fixed listed at 4.375%. I was just talking to the rep about it to get an idea of how the process works, we didn't get into my credit score or equity etc...so why the difference in the rate? She told me that the rate of 4.375% has 2 points built in but it doesnt' say that on the website. Am I missing something? I am new to the process so wondered if she was telling me nonsense or not.
Hi Baby1nov,
The lender shouldn't have even quoted you a rate without knowing things like your credit score, loan amount, loan to value and property type. Without this information the lender is just guessing at the rate and really doing you a disservice.
If the lender is advertising a rate on their site they are supposed to include the APR, and a disclosure that looks something like this:
Information provided is solely for use by licensed real estate agents, builders and consumer use but not for distribution. Rates and APR are accurate as of date shown above and subject to change without notice. *APR and rates are based on $200,000 loan amount with 3.5% down and 30 day rate locks.
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