Four Facts About Rate Shopping

Interest rates can be very volatile depending on market conditions. It is not uncommon for interest rates to change multiple times during one day. Therefore, if you call one lender on Monday and then call another lender on Monday afternoon or Tuesday there is a possibility that you are comparing apples and oranges. It is very important that you compare rates at the same time.

Mortgage rates are very specific to each person’s situation. The credit score, the loan amount, the type of property, the loan to value ratio, the occupancy, the rate lock period and the type of transaction (Purchase or refinance) all have significant impact on your interest rate and fees. Most published interest rates are for one specific scenario which is mentioned only in the fine print. This is why shopping for mortgage online could lead to wrong conclusions.

If the lender cannot commit to the rate they are offering by locking it at the time of application the rate quote is not reliable.  For example if the lender requires full loan approval before the rate can be locked you could  be at risk of ending up with a higher interest rate.

Typically on a purchase transaction the lender has absolutely no control over the third party fees such as escrow, title, recording, home inspection, termite inspection, etc. If your lender provides you with a Good Faith Estimate or any type of summary with all the fees make sure you know which fees are being charged by the lender and which fees are third party fees. When comparing two lenders it is important that you compare the loan related fees only. One lender may have made conservative estimates for third party fees while another lender may have underestimated.  Be careful!