Q: We want to refinance and went to our current lender. He qualified us, and said our credit scores and FICOs were off the charts. Then, he said he could give us a 15-year mortgage for 4.375 percent.
I told him I wouldn’t do it for anything over 3.75 percent. He said no one had those kinds of rates.
I know my lender is one of the top mortgage lenders in the country – and one of those big box lenders you’re always talking about. How can he not know interest rates have fallen further?
I told my better half that it’s time to move to someone that has had some oxygen hit their brain lately, but she thinks it is better to give him more time. What do you think?
A: Once you’ve taken a look at this week’s mortgage rates, you probably wished you’d reconsidered your lenders offer. This week, mortgage interest rates for a 30-year fixed rate loan jumped up to nearly 5 percent. The 15-year rate is about where you were quoted.
But when you wrote this note, which was several weeks ago, I told you to move on. At the time, your lender’s quote was well above where other 15-year mortgages were being quoted, and that told me the company wasn’t that interested in landing your business.
If you’re getting quoted a mortgage interest rate that is a half point or higher than what you know to be the going rate, and you qualify for the better rate because of your credit history, cash available and equity in the property, the lender is telling you that it doesn’t really want to be in the retail mortgage lending space. If you jump at this sort of interest rate, then the lender will do it because there is a huge amount of profit on the loan.
In any case, you shouldn’t only be looking at one lender when it comes to refinancing your mortgage. As I’ve often said, you should speak to four or five lenders, including a big national bank (that would be your current lender), a mortgage broker, local lender (like a small, local bank), a credit union (if you belong to one and can join one) and then an Internet lender.
Until you’ve thoroughly perused what’s on the market, you won’t know what you can get. And, believe it or not, mortgage lenders respond well to competition, so simply by mentioning that so-and-so gave you a better offer will get you a lot further than simply saying, “We won’t look at anything over this rate.”
BTW: I’d also check out some of the other major lenders, or “big box lenders” as I call them. You might find their rates are better. And, check out BankRate.com for an idea of what local lenders are offering.