Top 7 Reasons You'll Never Knowingly Secure The "Bottom Of The Market" Mortgage Rate

There’s a lot to be said for homeowners and buyers who take the time to do their research when it comes to securing a home loan. After all, this is likely the largest investment you’ll ever make, so it’s worth it to spend the time and searching for the best loan, at the best interest rate. However, try as you might, it’s impossible to knowingly secure the absolute bottom of the market rate, as too many factors play a role in interest rate changes. Here are the top 7 reasons that you’ll never be able to knowingly get the “best” rate on a mortgage loan.

1. Rates Change Constantly.
   
   Interest rates on mortgage loans are in a constant state of flux. Certainly from day to day, and even hour to hour, rates change. This means that you may see 2, 3, 4 or more different interest rates in a single day. It’s impossible to know first thing in the morning for example, if rates may increase, or decrease by the end of the day.
   
   
2. Different Programs Come From Different Lenders.
   
   Say you’re doing your due diligence, and have decided to shop around to get the best interest rate. You call three different (and hopefully reputable) brokers or lenders. It’s highly likely that they (unless you ask for a very specific product) will quote you rates from different loan options. One may give you an interest rate quote for a loan program with no points affixed. A different lender may quote you an interest rate on a loan with 1 point. The interest rates on these different types of loans will vary, in some cases making a difference in rate of .25%-.50% or more
   
   
3. You’ll Never Get Two Quotes At The Same Moment in Time.
   
   When you call a lender for a quote, they will provide you with an interest rate as it stands at that particular moment in time. When you call the next lender, you’ll be speaking to them at a different time, and as a result they’ll be quoting the rates at that moment in time. That is, because of the time differential, shopping for the lowest rate is like trying to compare apples and oranges; as time lapses can produce very different results. Shopping for a rate would be very similar to shopping for aspirin, for example. You call several different stores to see who has the lowest price. By the time you find what you think is the lowest price, and have purchased the aspirin, you go to a different store only to find out that aspirin had gone on sale at the first store you called, or they had a coupon in the store advertiser, which you didn’t know about.
   
   
4. You Have To Assume That Everyone You Talk To Is Telling The Truth.
   
   In a perfect world, every broker, loan officer, mortgage advisor, etc would always give you a fair and honest quote. Unfortunately, this is not the case. As in every industry there will always be bad apples, who are more concerned with capturing your business, even if that means they have to use the infamous bait and switch (quote you a low rate, then change it at the last minute).
   
   
5. Lenders Will Have Different Disclosure Requirements.
   
   Much like different lenders will have different guidelines for determining who qualifies for a loan, and which loan product they’ll qualify for, they also have different disclosure requirements. That means, information that your loan agent, or the lender has to disclose to you, will vary. For example, most mortgage lenders don’t have to disclose what they are making on the loan, but some do. Those who do have to disclose may appear to have higher costs, when actually they may be lower. That’s because the disclosure forms are different and can be misleading.
   
   
6. Honest Brokers and Agents Will Probably Not Have The Lowest Quote.
   
   This is another sad reality when it comes to securing a mortgage loan. Honest, professional brokers, will rarely provide you with the lowest quote. The reason for this is simple. Experienced, trustworthy mortgage brokers will quote you a fair, honest price up front, regardless of what that may be. They will not go to any lengths necessary (read: bait and switch) to secure your business. This doesn’t mean that they’ll have the highest quotes, but they won’t quote you a rate that is substantially lower than others you’ve received.
   
   
7. Your Notes Are Likely To Be Disorganized
   
   You’re going to get a lot of information from each broker you speak with. Even with your best efforts at taking detailed notes, by the time you’ve finished shopping for rates, and compiled all of your notes, you’re likely to be overwhelmed. Looking through your notes to find all of the details from the first broker you talked with, and comparing them with notes from the third or fourth broker, you’re also liable to find that you don’t remember exactly what certain numbers in your notes mean. Similarly, as stated earlier, you may find that you have quotes for very different programs, and you’ll need to call some brokers back to clarify quotes, or request new quotes.

Ed Craine is CEO of San Francisco based Smith Craine Finance, an award winning mortgage brokerage. He was appointed Vice President of CAMB in 2007. Ed serves as an Executive Director for BNI, and is a contributing author to several NY Times Best Selling Books. Visit http://www.smithcraine.com