Interest Rate Shopping? Tips On Hidden Tricks

Mortgage and Lending with Cambria Mortgage NMLS 274132

Mortgage Rates On The Internet

Minneapolis, MN: Buying or refinancing a home is typically the largest financial transaction of your life. Shopping for the best interest rate just makes sense, but as with so many other things, caveat emptor, or latin for "let the buyer beware."

Many lenders post their interest rates on their web sites. Sadly, day in and day out, I must constantly show clients that what they though they were looking at, isn't exactly what they were looking at.

While we show national average interest rates in the USA on our web site, I'm even hesitant to do that because people just assume "that is their rate", while really it is more of just giving people an idea of where rates are hovering, versus what any particular client may actual get. 

There are many reasons posting rates is dangerous, but the biggest two are simply that rates can change at any moment, and without knowing your exact situation, you could very easily be looking at a rate that has absolutely no bearing whatsoever to what you would actually get.

Did you know that mortgage rates can vary greatly by loan type, purchase or refinance, credit score, owner occupied home or rental, and many other factors?

Then you also have personal choices to select that effect rate. Do you want to pay points to buy down to a lower rate? Most people don't because of the added costs. How about a no lender fee option? The closing costs will be lower, but your interest rate will be much higher.

READ The Small Print and Assumptions You See Hidden On Rate Quote Web Sites

The big print interest rate you see is generally designed simply to capture your attention! You need to be very wary about the small print.

mortgage scams Tricks to Watch For:

  • A very well know large internet lender posts mortgage interest rates that look competitive, but their rates ALWAYS comes with around 2 points (2% of the loan amount) in additional closing costs. It is there so they are legally compliant, but presented in such a way as to be hard to notice.
  • Lenders usually post purchase loan rates, which are lower than refinance rates.
  • Rates only for extremely high credit scores
  • Rates only for very loan loan-to-values (say, under 75%)
  • Rates for very short rate lock periods, like 15-days or less.
  • Rates only available if your loan is fully approved.

Lenders Don't Just Make Up Interest Rates

All your standard fixed rate mortgage loans base the rate of the day off of the MBS (mortgage backed securities) market. This sort of like saying we all pay the same wholesale cost everyday. From there, lenders add their margin, adjusted for the risk factor, and offer the client a rate.  This is why lenders all have extremely similar rates, and why anyone posting something significantly different is almost always hiding something in the small print.

The ONLY Accurate Interest Rate Quote

Finally, understand that the ONLY way for anyone to get any sort of 100% accurate mortgage rate quote is to complete a full application with a lender, and then have the Loan Officer go over your various options, wants, needs and goals.

If you are ready to learn more about your home financing options, our team at Cambria Mortgage is here to help. Connect with one of our trusted and licensed Loan officers today by call (651) 552-3681, or visit online.  We are here to help!

Cambria Mortgage, the Joe Metzler team, lends in Minnesota, Wisconsin, Iowa, North Dakota, and South Dakota only.

Equal Housing Lender. NMLS 274132, 322798.  lends in the following states: MN, WI, SD, ND, IA, This is not an offer to lend or to extend credit, nor is this a guaranty of loan approval or commitment to lend. The information here may not be up-to-date and may no longer be accurate. Products and interest rates are subject to change at any time due to changing market conditions. Actual rates available to you may vary based upon a number of factors. Consumers must independently verify the accuracy and currency of available mortgage programs. All loan approvals are subject to the borrower(s) satisfying all underwriting guidelines and loan approval conditions and providing an acceptable property, appraisal and title report. (C) 2022 Joe Metzler

Comments (2)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em:

Thank you for sharing the information. Buyers in your area will benefit from your expertise. Wishing you continued success.  Have a wonderful day.  bill

May 24, 2022 01:55 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe Metzler if someones main focus is on getting the lowest interest rate possible, they are prime candidates for hidden fees, and being taken advantage of.

May 24, 2022 03:28 PM