Why do I feel like when someone calls me to talk about interest rates, they are calling multiple people, scouring the internet, and getting a lot of misinformation? I have a good friend who works at Freddie Mac (FHLMC) who I met for dinner recently. Over dinner conversation she mentioned that when FHLMC sends out their report on average interest rates. They get calls daily from homebuyers and people interested in refinancing. These people ask how to apply with FHLMC for that rate! My friend says the callers will say, “Can I get that rate from you that you guys reported, I can’t find it anywhere else!” They then have to explain that FHLMC is not a lender. FHLMC is a corporation authorized by Congress to provide a secondary market for residential mortgages.
You have all probably seen these articles; some source or another reports the “average interest rates” for the week or the month, and then people go nuts. I get a lot of puzzled or even angry callers on a regular basis. Everyone wants to know why a generic rate quote does not apply to them.
Let me cite from a previous blog which I wrote about “average interest rates” a few years ago:
“The average interest rate is a compilation of a lot of different interest rate quotes and variables that do not apply to everyone’s exact situation. The average interest rate is a national average figure, with interest rate quotes from across the country that may not apply locally, and many times also includes interest rate quotes with points. But most consumers do loans with 0 points. Hence, the ‘average interest rate’ you see on TV or in the newspaper always looks artificially low.”
The reality is that if you are buying a condo, with 5% down, with a mediocre credit score, you cannot expect the same interest rate quote as a home buyer purchasing a single family home, with 20% down, and a stellar credit score.
This, in a nutshell, is also why it is hard to shop for rates online. It’s impossible for a website to decipher all your personal variables that go into a rate quote, such as property type, down payment, credit score, how long you need the rate locked-in for, occupancy type (primary residence, vacation home, rental property), and more. It takes a human being, who will ask a lot of questions, to give you a proper, exact, and valid rate quote.
There are lots of other reasons why shopping for rates should take into account service, execution, experience and much more. Click here for more articles on shopping for mortgages.
The bottom line is don’t believe everything you see, read, or hear. Call a qualified loan officer, ask a lot of questions, and be prepared to be asked a lot of questions, and only then will you be assured you are getting a good deal from a proper service provider.