St. Louis Real Estate – Where is my 4.75% Rate I was Promised??

If You’re Holding Your Breath for 4.75% Interest Rates, You’d Better Read This First

The last few weeks in the mortgage industry have been a flurry of activity to say the least. Mortgage Professionals have had little chance to dial out and reach our clients. With all the incoming questions about refinancing or picking up the pace on finding a new home and take advantage of great rates, it’s all we can do to keep up with the inquiries. (No complaints mind you-can I get a Hallelujah?)

The persistent question is, however, “Where is the 4.5% rate I’m hearing about? Can’t I at least get 4.75% rates?”
Answer: “YES!”
Addendum: “It’s gonna cost you to get it”

Case in point, I had a long standing client call to tell me that a bank affiliated with his insurance company called to offer him a 4.375% 30-year fixed loan, with $0 closing costs. He was going to take the deal over my offer of 5.25% 30 year fixed with $0 closing costs. I called him back immediately and told him if he could truly get that deal, he should SIGN the paperwork NOW!! I couldn’t offer him the same deal and if they were serious, it wouldn’t last long.

I offered him one last bit of free advice. He was, after all, a good client and I couldn’t help but look out for his interests. “Get a Good Faith Estimate” I told him. I’d be happy to look it over with you and review it for you at no charge. Just to make sure you’re getting what you deserve. His credit is stellar, assets in fine shape, loan to value low. He ought to get a great mortgage…he’s earned it.

He called me three days later to say he saw the GFE and it included $6,000 of (supposedly free) closing costs rolled into his loan. His rate in writing on the GFE was now 5.375%.

Rolling closing costs into the new loan is not uncommon. Portraying it as “no cost” to the client is misleading. Unless the bank is paying or the Mortgage Professional is paying, the borrower is going to pay for closing costs over time included in the new loan. Hint: Always verify the APR statement or Truth In Lending to check this. If you don’t know how to evaluate what you’re really paying, ask an experienced Mortgage Professional to explain it. It’s important. (As a gesture of good will and thanks for my client’s continued business, my original offer was to cover his closing costs out of the commissions I was being paid from the lender.)

Quoting someone a 4.375% is also acceptable, so long as it’s explained what it will cost to “purchase” that interest rate with discount points. At the very minimum, it must be explained that this is a BASE rate. Each and every change in the “standard” conventional loan process COSTS THE BORROWER in interest rate. These are called pricing “add on’s” and they can hurt. Increasing my client’s loan amount, for example as this bank did, raises the loan to value and costs a bump up in interest rate. His closing date was going to be 60 days away. That sort of delay also COSTS THE BORROWER in interest rate.

Unfortunately, advertised rates are not the final rate you will get, once all the factors to suit your INDIVIDUAL needs are put into the equation. You must have a Mortgage Professional who will look at your whole situation and offer you options on what will suit your objectives.

Bottom line is, we weren’t looking at an “apples to apples” offer. And it didn’t turn out to be what he’d been promised.

Result? He’s still my client and my offer at 5.25% with $0 closing costs (for real) turned out to be a pretty darn good deal for him.

Having a Mortgage Professional who will give you the most HONEST answers is critical, especially today. It’s important to know that person is working in your best interest. Even if it means telling you to take the competitor’s deal when it serves you. There are so MANY variables in today’s mortgage market, even the most savvy borrower can’t keep up with them.

In today’s lending environment, staying abreast of underwriting changes is as challenging as keeping up with the tax code. Even more difficult to be realistic. Make certain you work with someone who is constantly informed and can educate you. Uneducated mistakes will cost you not just at the closing table, but for the life of that loan. Feel free to browse my website at www.LoansByAprille.com to find useful information such as this at your fingertips. Or contact me directly at (314) 363-3913 or Aprille@LoansByAprille.com to get answers to your questions.

This entry was posted on Tuesday, February 3rd, 2009 at 2:45 pm and is filed under Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.