Low advertised rates
How many times do we see those annoying TV commercials with this guy screaming about no closing cost, no down payment, and no interest for five years! Buy now pay later! Come on man! Really are we that desperate or are we that foolish to fall for those old lines?
We have heard it so many times
“Rates as low as 2.75% apply now!”,
“Unbelievable lowest rates refinance now”,
“Purchasing a home? We have the lowest rates come in now!”
Then if you don’t blink, right there at the end you see that tiny print that you can’t read and it’s gone in a flash. I can hear my kid laughing now saying “Dad, just pause the TV and read it”.
Well I did and I have read those and all the other garbage that we receive in the mail with pre-approvals for everything that comes in and I tell you, I get so sick at how misleading it all is.
Let’s understand the facts and how they can get away with those garbage ads.
First of all, www.super-fast-loans-are-us-now-kiss-my-hiney-cos-we-are-that-good.com are not super-fast. Their lowest rates along with every other www.mortgage-me-to-the-hilt-and-sell-my-soul-to-the-devil.com company’s lower rates are not available to most of the public.
In layman’s terms the Government regulations state if you are advertising a rate you must have at least one scenario that could be met by a consumer at the moment that rate is available.
What does that mean?
The fine print says that on Monday October 14th at 10am EST the rate was 3.25% if you have a credit score of over 800, a loan to value of under 50%, a debt to income ratio below 20% and the home is a new purchase for a primary residence in one of the eight states listed and subject to ‘other underwriting guidelines’.
Now that just eliminated over 97% of the population AND that rate was only for that moment in time, which has now passed and unless the stars align and polar bears start wearing Bermuda shorts it will not be seen again.
But you know what? People are going to call anyway and that’s what those advertisements are all about; generating the phone call to sell you something else that you may qualify for or maybe try to pull a few fee’s out of you along the way before you get denied for the loan.
The reality of it is this:
It’s about total loan cost and what you can actually qualify for.
Lenders have underwriting guidelines they need to stay within, so as to keep certain standards or quality control on the money loaned out. A ‘bracket of rates’ are published each day and in most cases are adjusted throughout the day around market conditions and pricing.
Let’s take as a point of discussion that the secondary markets are lending money at 3.5% the lender will base their rates on that mark. With that for example a lender may offer a rate bracket starting at 3.75% and up to 5.25%.
Those with great scores, lower loan to values and lower debt to income ratios pose less risk to the lender so they are the ones who will see the 3.75% rate. While others will come in the higher ranges depending on their financial picture. Those that have a rougher financial picture may get denied altogether.
When shopping for a mortgage loan or any line of credit it is always good to know your financial position before you start. You do have a right to ask about your scenario before you apply but be aware that applying at too many places can hurt your credit score. A lower credit score can cost you a lot of money in finance charges and higher rates. So plan ahead, ask questions and know all your options.
Visit our website at www.solutionsfirstmortgage.com and start with some real facts.