You went on one website and tried to see what your mortgage payment would be.
It was HIGH!
That was it, you gave up.
No home for you!
Well that was dumb.
Myth
Everyone Gets the Same Rate Based on "The Market"
Rates you hear about in the news are national averages. They are a starting point, not a guarantee. What you qualify for is based off of:
- Your credit score - even a 20 point difference can move your rate
- Your loan type - conventional, FHA, jumbo, ARM all price differently
- Your down payment - more down means a better rate
- Your debt to income ratio
- The lender themselves - pricing, fees and relationships vary more than people realize. Sometimes having a relationship with the bank itself — like keeping deposits there — can unlock better pricing too.
Two buyers with nearly identical financial profiles can walk away with two very different rates depending on who they work with.
How it Happens
What a Rate BuyDown Actually Is
One of the biggest tools that gets a lower rate is a rate buydown. Essentially, you (or the seller, or the builder) pay an upfront fee to lower your interest rate - either temporarily or for the life of the loan.
- Permanent buydown - pay points upfront to permanently lower your rate for the life of your loan
- Temporary buydown (2-1 or 1-0) - your rate starts lower and gradually increases to the full rate over the first year or two
- Seller or builder-paid buydown - in this market, sellers are increasingly willing to pay for a buydown instead of dropping their price. The seller keeps their number on paper and the buyer gets real, lasting monthly savings this way.
The Takeaway
Shop Your Mortgage Price Like You'd Shop Your Car Price. You wouldn't walk into one car dealership and buy a car without, at the very least, going on line to price compare. Why only go to one lender?
Want a list of some of our clients favorite lenders? Let's Talk!
I can introduce you to the lender who got one of our clients 5.1% last week and many other client favorites. You can talk to all of them to see who has the lowest rate for you and then calculate what your monthly payment would be for the average home price you were thinking. No pressure to buy, just an exploratory call to get your wheels in motion, so when the time is right you are ready to move!
