How to find a great mortgage interest rate in New Jersey or any other state......

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shopping for mortgage interest rates


Shopping for that best interest rate. First off, you need to be careful when using the term best, because we always want the best of anything. Remember these two old sayings?  "You get what you pay for" or "If it's to good to be true, that it might not be true."

Well, the same could be said when shopping for that mortgage interest rate.  I read an article last week that disturbed me some, because I felt it left some important information out. It started out that you should deal with a mortgage broker instead. Here is his statement to as why you should do this. 

"Try a Mortgage Broker

Sure they’ve taken a lot of flak lately, but if you work with a mortgage broker, you can have them shop your loan scenario with a number of banks and lenders to find the best rate...."


The first issue is that this article is written by a Mortgage Broker. And he doesn't go on to truly define the differences. You also have Banks and Mortgage Bankers.  A bank would be like Wells Fargo or Bank of America, where they typically service the loan themselves and use their own rates. A Mortgage Banker can service their loans, but usually sell the loan after closing to an investor on the secondary market. This is exactly what a Mortgage Broker does. But through a broker, your loan is underwritten by another bank and sold to them at the closing table. The biggest difference is that the Mortgage Banker has full control over the loan and does everything in-house. The Mortgage Banker is also set up with 4 to 6 investors just like the Mortgage Broker, to where they can shop your rate around.



There are a few basics that you should be aware of when shopping for an interest rate.


Lock-in/Float procedures - Make sure your loan officer goes over the lock-in and floating policies before you end your conversation with them. If they don't do this, in my opinion, this is on purpose and a red flag. Why?  The longer the lock period, the more expensive the rate or the cost for that rate. Most will just give you a 15 day or 30 day price when shopping.

Itemized fee worksheets - aka, the old good faith estimates.  The new good faith estimates don't break down the lenders total costs. If you get some sort of fee sheet that breaks down all costs, you want to total up the lenders fees, plus points. Some lenders won't charge points, but high fees. If I only charge points and my total fees are the same, I am still cheaper. Because you get to write off a certain amount of those points. Please consult a CPA for this.

Shop Interest Rate and APR (annual percentage rate) - Be very careful. Using the APR is not always the best method, because some lenders leave out certain fees that don't have to be included. There are some other tricks also. My advice?  Just shop the interest rate and lender fees.

Interest Rate advertising - Be leery of specific ads or individuals that use such terms as “best interest rates”, “cheapest rates”, “lowest rates than anywhere else”, etc, etc  Most rates are very close.

Credit scores - There is more to rate than just rate. And even sometimes just the credit scores, such like income issues, actual credit issues, and so much more.

Shop on the same day - Most important tip - Always shop all lenders on the same day. Why?  Interest Rates can change daily. And if one of those loan officers follows up with you, letting you know that rates went up and the others didn't, another red flag and use this when making your decision. And if the loan officer is trying to get you to float, how does one know that is the best rate?  Just food for thought.



Summary :  Just be careful... go with your gut at times. And those that seem to educate you the most, usually have your best interest at hand. Even if they might be an 1/8 of a percent more, that might be your best bet and not the best interest rate or the lowest interest rate. Keep that in mind, because shopping for an interest rate is not as easy as it sounds.



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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 09/22/2010 01:24 AM
  2. Lyn Sims 09/27/2010 04:02 AM
Lending / Financial
New Jersey Camden County Cherry Hill
1st Time Buyers
All About Mortgages/Mortgage Networking
The FHA Mortgage Group
interest rates
mortgage interest rates
shopping for interest rates
shopping for mortgages
good faith estimates

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Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Which is precisely why I shop loans for my buyer/clients.  Consumers think about rates, rates, rates and don't usually have a clue about terms/conditions/fees, etc. 

Sep 21, 2010 09:10 AM #1
Marilyn Boudreaux
Marilyn Boudreaux, Century 21 Bono Realty - Lake Charles, LA
Lake Charles LA Century 21 Realtor

If you are going to shop, do it on the same day----that is the best point Jeff and something consumers don't stop to think about.  You are right on about the rates changing daily, its not fair to compare if you are not doing it same day---well thought indeed!

Sep 21, 2010 10:36 AM #2
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Jeff - as always some sage advice for buyers. So often all they consider is rates and not all the other stuff that may have a big impact


Sep 21, 2010 11:45 AM #3
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Great advice Jeff, I'm suggesting this for a feature and re-blogging it.  Thanks.

Sep 22, 2010 01:23 AM #4
Tim Bradford
Cleveland, OH
NMLS 250013

Jeff,   Things might be much simpler for borrowers to compare various interest rates and closing cost offers if all lenders use the same format of disclosing fees.   I do like the new 2010 Good Faith Estimate from that standpoint if borrowers are realize that Box "A" (Items 1 & 2) are the Lender Controlled fees.  The problem is consumers tend to see the Grand Total of Origination Charges (Box A) and Other settlement Services (Box B) and do their comparisons based upon that.  

The other items you mention  are also important items for consumers to consider. 

Sep 22, 2010 01:45 AM #5
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


LENN... . consumers certainly think about rates a lot.. and what I have found just recently was a client that I lost to a competitor who was $500 cheaper than I was, yet he couldn't lock in until after the appraisal was done... lol  Sorry, but why even shop around. What ever happened to common sense.

MARILYN... . I can't stress shopping the same day and understanding your lock options... to things that aren't talk about much by other loan officers.  And thanks for the polite compliment.

JEFF.... . well, can you blame them if the loan officer doesn't educate them on all fronts?  Thanks

GABE... . thanks for reblogging this and for the polite compliment..

TIM... . That is why I actually don't like the new good faith estimate, for that very reason that all the fees are lumped together. If you don't have a loan officer that will share the breakdown with you, then how does one know what kind of deal that they are getting. thanks for your input.


Sep 22, 2010 02:41 AM #6
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru


I'm doing an FHA streamline refi right now that a borrower is going to pay 1/8% higher rate than the best rate I could give him (or he could get shopping). The difference is that his 627 credit score would prevent the deal from even happening with most lenders!

They just don't understand until it's too late. Is it better to have a low rate on a loan you didn't get, or a slightly higher rate on one that does close? Hmmmm...

Well done as always buddy!

Gerry Suarez, Jr.

Your FHA Loan Pro!

Sep 22, 2010 03:33 AM #7
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Great post, Jeff.  When shopping for a loan, "best" has so many variables.

Sep 22, 2010 04:21 AM #8
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans


GERRY... . it makes sense to me... but we can't win them all, I know that.  And some will just believe others, because it just sounds good, when in reality, it isn't.  And bingo, they just don't understand it until it's to late.  And thanks for teh polite compliment.

PATRICIA... .  Yes, "best" has way to many variables.  I still lost one last week, and the consumer wasn't properly educated on how the lock-in period worked.  Once he asked, he was told that he couldn't lock in until the appraisal was done. Why would you even choose this person even if he was lower in rate. Makes no sense and common sense should be a 3 alarm.. but oh well.  Thanks for the compliment.


Sep 22, 2010 09:18 AM #9
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Great post with good explanations on a confusing subject for buyers. Banker, broker, blah, blah, blah.

Sep 27, 2010 04:00 AM #10
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