You've all seen the ads for a certain mortgage company. "You can get a 30 year fixed rate mortgage for 6.375 percent with no fees, no points blah blah blah blah". And they say in there commercials, "PEOPLE ARE SMART". I agree with that marketing slogan but I dont like how they are hypocritical of there rates/no points etc.
Ofcourse a 6.375 percent rate would be an amazing mortgage, but one with outstanding credit would have to apply for the loan, say... a 720 score, which is ALMOST unheard of. The average credit score around the nation is a 678, hardly good enough for the 6.375 percent interest rate. Most lenders look for a score of 680, and thats with 5 percent down!!! And don't get me started on the no points and no fees garbage! All loans have to go through an appraiser, a processor, an underwriter, an attorney etc. Do these people work for free? No! The company won't give you the 6.375 percent rate, instead they will raise the interest rate so the lender will give them more money for giving them higher interest rate and pay there processors, underwriters etc. Now, would you rather pay a point origination, and closing costs and get a lower interest rate? Or would you rather have no closing costs and pay an extra percentage point on your interest rate which could add up to thousands of dollars over the course of your 30 year term.
People ARE smart, you are a hypocrit, and I would never refer business to a company that cares more about how much profit they make, than helping someone in the most important transaction of there lives. I've told many of my applicants it may not be the perfect time to buy a home becuase of there current situation. I'd rather sleep well at night knowing that my potential borrowers aren't going broke because I told them to buy a house they can't afford, than be rich. The potential to make money is out there, and I can always make money the honest way!
Please let me know if I can help with anything!
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