Mortgage Rates: Finding The Lowest

If you go with a certain lender, just because they made you feel warm and fuzzy about their super-low rates on television, you are probably making a gigantic mistake.

The bottom line is this: Mortgage rates are based on many different factors, all of which change daily. The stock market and the U.S. bond market both affect mortgage rates. You can read more about that here.

Sometimes, every single lender in the United States will have a rate-change right in the middle of the day. (That is why we like to use Twitter to communicate rate changes to our clients.) Sometimes, mortgage rates change several times in one day.

Every single day, every single wholesale mortgage lender in the United States puts out a new rate sheet, based on the aforementioned market conditions, for that particular day.

So how does a company produce and broadcase a commercial, with Arizona mortgage rates listed in the ad they produced two weeks ago, without even knowing what the mortgage rates will be when you actually need to call?

They lie and that’s what all the fine print is for. You know at the end of the commercial where they show you a bunch of microscopic print for about 2 seconds? It’s impossible to read with the biggest, big-screen, highest-definition television you can ever find.

It’s impossible to read for a reason. It basically says that rates are constantly changing and that you won’t necessarily qualify for the advertised rate and blah, blah, blah.

In the Arizona Republic, every Sunday, there used to be an area in the real estate section called “Mortgage Marketplace” or something very similar. I have seen this in papers all over the United States. When I travel, no matter where I am at, I see a section of the newspaper that lists the rates and fees for a dozen or so lenders in your area.

Lots of lenders use it, so it must be popular. One day, a salesperson called my office…and although I’m not crazy on the idea of print advertising, I agreed to give it a go.

The salesman called me on Friday and asked me what my “rates” were, to be published on Sunday.

Uh oh. The financial markets are closed on Sunday. I never thought about that when I paid for the ad.

I told the newspaper guy my problem and he said, “Just give it your best guess.”

So I supplied the lowest possible mortgage rate I could have offered a client on that day, which was Friday, at the close of the business day. There is no better guess. My answer was the most honest I could come up with, even though I was uneasy about the idea of posting rates on a day that there were no mortgage rates anyway.

I didn’t get a single telephone call from the ad. Not one call. Do you know why? I bet you can guess.

I had the highest rates in the paper. Since everybody knew that they didn’t have to honor the rates anyway, some of my competition actually was a full percentage point lower than I was. Only one mortgage company wins all the leads that week and the irony is: It’s the mortgage company that has the most guts when it comes to blatant bait & switch mortgage tactics.

I did it that one week and I’ll never do it again. If you want to pick a lender based on weekend (or even weekday evening) advertised rates, you might as well throw a dart at the Yellow Pages and call the ad your dart lands on. At least by doing this, you might get an honest lender with integrity.

If you use the mortgage rate guide in your Sunday paper, and you call the lender with the lowest rates, you just picked a deceitful mortgage company handle a major financial transaction. Bad idea!

As an Arizona mortgage broker who is legitimately trying to offer my clients the best possible mortgage rates, this is one of the most frustrating things to deal with.

I take telephone calls like this almost every day. Somebody calls and says they would like a rate quote, because they are “thinking about refinancing.” They tell me that they’ve been calling lenders all week and that they will probably make a decision some time next week, based on the research they are currently conducting.

Except, I wouldn’t dare to call what they are doing “research,” because rates change every day, as mentioned previously in this post.

So let’s say you call the lender with the lowest mortgage rates in Phoenix (which would be me)– and you call me on a day in which rates have spiked for whatever reason. So I tell you the rate is 6.00%.

Three days later, and ten phone calls later, you call the worst, most dishonest lender in Arizona. Rates have dropped so much in three days that I could offer you 5.00%, instead of the 6.00% I offered you several days before.

You talk to the higher-priced lender on a better day though. And what happens? They offer you 5.5% on a day that Arizona Wholesale could have offered you 5.00%.

But you think, “Wow. 5.50% is so much better an interest rate than AZ Wholesale offered at 6.00%”

And you end up getting a lousy deal.

If this doesn’t make perfect sense to you, then please don’t bother taking my advice: But the only way to compare Arizona mortgage rates is to shop on the same day. If you are going to call a couple of different mortgage companies each day for a week, you might as well do nothing. You have done nothing. You have learned nothing.

Do all your rate shopping on the same day, or just call Quicken Loans and get your over-priced loan over and done with. You’ve got better things to do than save money.

A lot of people think this is smart. A lot of consumers think that if you tell the loan officer you are shopping around, he or she will offer you the best possible deal because you are “shopping.”

If you call me and tell me that you are shopping, it immediately takes the wind out of my sales. I realize that if you are telling me that; you are probably telling everybody that. And if you are telling everybody that, what do you think many mortgage brokers are going to tell you about their rates?

Well, they are probably going to stretch the truth a bit. If they tell you the truth, they know the next person you call will probably lie and if not that person, the person after that. When people do that, it almost forces the starving loan officer to stretch the truth a bit, just to put food on his family’s table. But that’s not your problem; and he or she doesn’t need to know you are shopping.

There is no reason to ever tell anybody that you are shopping around. That is a rookie mistake. If nothing else, remember that.

Personally, I don’t negotiate mortgage rates with anyone.

I can’t negotiate mortgage rates because I always put my best offer on the table from the get-go. I don’t have any wiggle room, because that means I was attempting to charge you too much to begin with; I got caught in the act; so now I have to wiggle.

If you call a mortgage broker and you tell him you found a deal with $500 less in closing costs and that broker says he can lower his own closing costs by $600– you are dealing with an unscrupulous person.

Makes sense, right?

Or, you can always try to negotiate finance with people who eat, sleep and breathe mortgages. I just don’t think it’s a good idea. Go with the guy who offers his best deal from the beginning.

I don’t care if you are shopping around. I don’t care what the other guy offers. To be honest, I don’t even want to know. I will give you the best possible deal I can afford to give you and still run a business. If you can find somebody lower than me– which never happens legitimately– please take it.