Special offer

5.625% Fixed Rate***

Mortgage and Lending with Valley Bank

5.625% Fixed Rate**  I HATE THESE ADVERTISEMENTS!!!!!  I am so sick of hearing about and seeing these VERY misleading ads.  I have had 3 customers in the last 2 days bring this up.  We all see these ads on the internet and the television.  So, for all of you that don't understand HOW they are doing this, here it is.  We all (banks and mortgage companies) can get you to that low rate, IF you have a 700 credit score, put at least 5% down, purchase a primary residence over $150,000, pay around $6000-8000 in points at closing, and are on a 5 year prepayment penalty..HAH!  Not so good after you hear the REAL story huh?  The points--many people don't understand that.  1 point is equal to 1% of the loan amount, so a $100,000 loan, 1 point= $1000.  After the lender charges you 6 points plus closing costs, you are looking at a lot more money that is not going to help you in the long run.  The average person refinances or moves to a new home every 4.7 years.  So you do math, saving yourself $50-100 a month (depending on the purchase price) and saving it for 4.7 years, turns out to be, at the most, $4700.  PLUS,  you tie up a bunch of your cash upfront.  Buying the rate down is not always the way to go.  I advise my clients to sometimes spend a little bit, maybe a point or two, if we can get a lower rate for not a huge cost.  I guess, I just got a little heated with some people actually believing that rates are around 5% and being mislead that it is very easy and cheap to get them.  I hope this blog will help some people understand the TV/internet ads.  Also, interest rates are not just a number, they are custom quotes.  It depends on EVERYTHING, credit, income, assets, property, down payment, term, conventional, ARM, etc.  As you can see-- it depends on many different things.  Please spread the word to people you know that the TV/internet ads are misleading and to be careful before they sign the dotted line, they may be paying much more than needed. 

R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

You go Girl!  Another pet peeve of mine is when the press reports when Freddie Mac does it's rate survery by saying that Freddie Mac reported today that the average 30 year fixed rate was X.XX%.  What they don't tell anybody is that the survey is done with one point factored in.  That's when the calls start coming in, "Why is my rate so high" and I have to take the time to explain to them that they aren't paying any points...if they want that rate, they can get it but it's going to cost them!


Bob Mitchell

ValueList Real Estate Services, Inc. 

Jul 10, 2007 06:30 AM
Leah Ross
Your Tampa Bay Mortgage Source - Tampa, FL
Tampa, Florida Mortgage
It's like the little asterik guy on TV...I love those commercials!  I have been meaning to write a post on him!
Jul 10, 2007 06:32 AM
Amber Ernst
Valley Bank - Davenport, IA

Bob- I agree, it is hard when you are not a "1% Origination State" like Iowa is not one.  So I hear you there.  We just need to keep educating the public.  Thank you for your comments!

Leah- HAHA!  I agree, that little asterik guy--good point!  And so very true!


Jul 10, 2007 09:40 AM
Lucky Lang
Premiere Plus Realty Marco Island - Marco Island, FL
Marco Island & Naples Florida Real Estate


This is like the old bait and switch game.

I know that you are too professional to pull this stuff with your clients!

Keep up the good work!

Lucky :)

Jul 25, 2007 10:30 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Amber... this is definitely a big pet peeve of mine. I wrote about this a few weeks ago.  Mortgage Advertising -- Is it like a scam?   One reason that we are seeing more of this now than we did last year is for 2 reasons....

  • Business is very slow for many
  • and even though it costs money, some lenders just say...let's spend the money. If we don't recoup it, we can just file for BK and start over with another name.
  • actually... a 3rd. those bigger companies have the money, take from their profit and will charge clients more to recoup it. Di Tech... their rates are low but look at the APR.... much higher. It covers their fees and to pay for more points.

But if you notice, they always flash these rates up quickly so you don't pay attention to the APR.... lol

jeff belonger

Aug 09, 2007 01:02 PM
Amber Ernst
Valley Bank - Davenport, IA

Lucky- thank you!  I would never mislead my customers!

Jeff-  that is very true about the APR and yeah, it is a very brief second that it is shown.  And the whole BK deal is bogus!  We have a company here that is just ridiculous...3 names in 4 years--great odds, huh?  Thanks!

Aug 10, 2007 07:09 AM
Michael Fowler
Fowler Realty Quad Cities - Davenport, IA
Broker, Owner Fowler Realty

Nice post.  I like to know that someone cares about there clients.

Jul 10, 2008 08:14 AM