Best Rate!

Shopping for a mortgage can be a very complicated product to shop for. At first glance, you would think it is easy, just look for the lowest interest rate right?  NOOOOO! Allow me to explain why the lowest rate is not at all what you want when you are purchasing a home. 

There are two critical statistics that you the consumer must first understand:

1. The average purchase transaction takes 44-46 days from start to finish according to Ellie Mae, the largest software company in the mortgage industry.  (We average 25 days)
2. For every 5 buyers that are provided with an approval letter to go out house-shopping, 1 buyer gets declined at some point during the loan process.  (Over the past 2 years we declined 3 buyers after issuing an approval letter out over 400 families we helped finance their homes). 

These are industry averages, which means some companies are even worse than the statistics outlined above.  Could you imagine on day 50 being told you don’t qualify?  It happens more often than you would think.  Generally speaking, the lower the interest rate, the less revenue is being generated, less funds are available to dedicate towards talented originators, loan processors, underwriters, assistants, and funders.  In addition, generally speaking, the lower the interest rate, the more conservative the lender’s guidelines are because there is literally much less “margin for error”. All mortgage company CEOS have a similar target as far as profit goes.  Mortgage companies that have a higher interest rate aren’t “raking it in”, they are simply allocating funds towards talented people to help you get to the finish line. 

The range of outcomes when applying for a mortgage can be anything from: Closing on time as expected, to the seller cancelling the purchase transaction because the financing is taking too long where you lose the money spent on appraisal, home inspection earnest money and maybe even items purchased for that particular home, which can be thousands of dollars.  The latter is an extreme outcome that doesn’t happen often.  The more common outcome could be closing in 45 days where the contract only provided you 30 days to close, and the 15-day extension may have cost $1,000 in late fees.  Maybe there was some stress involved.  Maybe you expected to close on a certain day, had movers and deliveries planned that you had to postpone or cancel.  So how do you assign a value to one of these outcomes when we don’t have a crystal ball to see into the future as to what would happen using this lender or the other?

The answer is it is impossible.  You have no way to know if going with the company that offers the absolute lowest rate will result in a smooth, stress-free home buying process or if it will be disastrous.  So, I ask you to consider these statistics when making your decision:

• Can you physically meet the people working on the file or is everything done online and I could never meet face to face with my Loan Officer?
• Is MY loan officer available after hours or on weekends, or am I working with a customer service department call center and taking to someone new every time I call?
• Which Loan Officer most clearly explained all parts to the mortgage process, offered different loan options and made me feel most confident that he/she could deliver on

To summarize, you want to try and factor in everything mentioned above against the savings of the cheapest rate and come to that conclusion yourself.  Keep in mind that the average mortgage in the U.S lasts about 5-6 years.  ¼% lower interest rate on a $250,000 mortgage will save you $38 per month, over 6 years would save you $2736. 

My goal is to provide my clients with a competitive financial package with unmatched service.  Like anything else in life you get what you pay for.  I hope you consider these factors when deciding who to trust with securing your home loan.