Mortgage rates, why so different at different banks?

September 8th, 2009

Are you puzzled why Conventional mortgage rates vary so much, day to day and from bank to bank? Or do you wonder why advertised rates are different when you call a mortgage lender? Many times rates are not all that different, they are just very complicated for a bank or mortgage broker to accurately publish due to numerous variables.

Most people are not aware that Fannie Mae and Freddie Mac have a whole chart of pricing “add-ons”. Add-ons are an amount (expressed in points or rates) that are added on to the “base rate” in certain situations. Some examples of add-ons are for:

  • condos
  • investment properties
  • multi-family properties (a 2 unit, for example)
  • credit score
  • extended lock-ins beyond the standard 30-60 days
  • loan-to-value

For example, if the current 30 Year Fixed rate is 5.25% with 0 points, but you want to get a mortgage for a condo, it may be 5.25% with 0.75 points.

Or, if you want a mortgage for a condo and you only have a 680 credit score, it may be 5.25% with 1.75 points.

Since this multitude of add-ons cannot be priced into an advertisement, most rates you’ll see in public may not apply to your situation.

Also, rates change frequently, as much as daily, and sometimes two and three times daily. So if you see an interest rate posted on a website on a Monday, the chances are by mid-week it has changed. And you also need to due a lot of homework to see if all of your variables apply to that particular rate quote.

The moral of the story is that shopping for a mortgage is not as simple as scanning a few websites or making a few calls. You need to do all of your homework on the same day, around the same time frame, and you need to make sure the mortgage employee you are talking to knows all of your variables from the property type to your credit score to your loan-to-value, and more.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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