Is that Interest Rate For Real?
By mortgage writer: Dave Leonhart

So, what do I mean by “Is that interest rate for real” anyways? Well, let me explain.

A few weeks ago I was surfing the web looking for the “lowest” rate again. Not because I need to refinance my mortgage, but rather due to my interest in seeing what others are doing when they are search for a low interest rate mortgage. Sounds logical enough, doesn’t it? Turn to the web to find the best deal money can buy.

First, before I get into what I discovered, let me just say that I have been in the mortgage business since 1980 when I wrote my first loan. This was a time when interest rates were 15%, and Ronald Reagan was just inaugurated President. So, when I say, I’ve been around this business awhile, you can understand the context of my point.

So, in order to make my search a little simpler, I only looked for a 30-year fixed rate, no points, conventional loan. (By conventional, I mean a loan amount of $359,650 or less) Well, after searching endlessly for several hours on the Internet I was truly amazed at what I found. There were more rates than I care to count, and in a wider range that I thought possible. But how can this be? A 30-year fixed rate loan “should” be somewhat identical across all lenders. Yes, maybe a ¼ of a point here and there, but basically you should find similar rates & fees between most lenders.

But, as I studied this further, I began to notice that some of these rates were in fact “way” too low to be real. How do I know this? Because I want to reference the experience factor I started talking about at the beginning of this article. I’ve been around long enough to know when someone is, shall I be blunt and say… lying!

So I decided to see, if in fact, my theory was correct. I placed a call to a few of these lender’s and asked the all too important question which would determine if they were in fact telling me the truth, and here is what I asked—

“This rate you are posting on your website for a 30-year fixed rate no points is very good and I would like to lock it in right now. Can you do this for me?”

Well, as you might have already guessed, nobody would. No sir, no way! “We can’t lock your loan until it’s almost ready to close” I was told by one lender. “It will take over 30 to 45-days to process your loan and rates might even be lower then, so why would you want to lock it in now?” Hmm… I guess my question seemed silly to him.

Another lender ‘admitted’ their rates do not get updated everyday. Great! That’s a little misleading don’t ya think? I asked. But, the lender laughed and thought that my comment was just sort of funny.

Somewhat discouraged by now, I decided to take matters into my own hands and check the rates of these websites everyday for one week. I bet you’ll never guess what this revealed, will you?

Yup, not one of these low-rate lenders updated their rates during my ‘test’ period. Not one! They just stayed the same, even though rates jumped around all over the place during this time.

So, what is the lesson you can glean from my experience? Don’t believe everything you see on the internet. If a lender will not lock the rate they are publishing, chances are it doesn’t exist. Therefore, going with reputable lenders is the “only” method I would recommend to you. But how do you find such companies?

Of course, one excellent approach is to use RatesIQ.com search feature which scourers the internet of ‘known’ reputable mortgage lenders, many of whom you may already be familiar with.

Another approach is to contact you local Better Business Bureau office and ask for a list of lender-members which have a good track record without complaints.

Whatever you do, be careful and don’t believe everything you’re told, or shown.