Interest rate Comparisons Can Be Deceiving—Here's Why.

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Once you have determined the quotes are equal- Then compare that rate and the fees the lender charges to get a fair quote, next ask them if they are licensed, what is the time frame need to close and do they get DU underwriting approval before they issue a pre-qual and ask them how many loans they close a month on time.  All these factors matter, too!  You can get the best rate, but it takes 4 months to close or you paid a bunch of loan fees, did you get the best deal? 

  • "Are they licensed" is a very good question as they are held to standards and have to keep up on the demands of current lending practices- by confirming this, hopefully they have quoted you a rate that they can carry through until the end, it is no fun getting a quote at the beginning and then 2-3 weeks later you can't have that quote you have to do a loan at a higher rate, avoiding big banks and folks that are not licensed should protect you from this problem.
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  • Get the quote in writing- if they are not willing to put it into writing, then does that offer actually exist? Remember, the interest rate is only one component of the whole process, there are so many factors as why a lender is a good one, or not so good. 
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  • How much are their fees to do a loan? is a real factor, each lender charges fees- either they are factored in the rate, or you pay them at the time of closing.   Just like you, they do like to get paid to work, so understand these fees are necessary but can be a somewhat controlled factor.
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  • How long is their process- from the time they get the accepted contract, do they need 30 days, 45 days or 60 days...depending on the type of loan you are getting the time frame can vary. 
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  • Understand the more information you provide the lender at the beginning, the more accurate and precise they can be. Ask for a list of items they will need at the beginning of working with a lender and get them everything they ask for. So, by the time you find the home you want to write an offer on, the lender is not scrambling to gather the information, they can focus on getting the loan done!  
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  • Remember the pre-qual given does expire...so make sure you are aware of that, and if it takes you longer than the expiration date you will need to provide fresh supporting documents. 

 

Now, if you ever run into something that just doesn't feel right you to-- something that they are not willing to correct, or you feel was unfair.  As long as the person is licensed you do have recourse. you can go to the Consumer Financial Protection Bureau (CFPB) at https://www.consumerfinance.gov/  let them know what happened, and this agency is there for oversight of lenders, and banks.