Have faith - ask for a Good Faith Estimate

‘So what’s your rate?’  If this isn’t the first question I get, its definitely the second and ‘yes’ its a very important question to ask, but its only a piece of the pie. 

Lets say my rate is 6% on ‘xyz’ product and is a 60 day rate.  The caller however, just received a quote of 5% from another lender which makes me look like I’m playing a different (and obviously losing) ballgame.  This leaves me with few questions/responses:

 1. Did the other lender provide the quote based on a 60 day rate? 

Here’s why this is important: sometimes a rate quote of less than 60 days (which represents the standard rate lock) can have a lower rate.  For example, a 7 day rate quote can have lower rate than a 60 day rate lock quote.  However, if you were to lock that rate for 7 days, you would then have to close within 7 days to receive that rate (typically).

2. What are the fees being charged by the other lender?  Or, another way to put it, ‘what was the other lender’s APR’. 

The APR (annual percentage rate) is a way for a consumer to make an apples to apples comparison when receiving quotes.  For example, a quote of 6% may come with an APR of 6.253 (making this up), while a rate quote of 5% may come with an APR of 6.789 - which means that while the lender quoting 5% is providing a lower rate, this rate is being offered in exchange for much higher fees - potentially making this not such a great deal.

 This leads to my next question: ‘Did the other lender provide you with a Good Faith Estimate of closing costs?’ 

3. The other lender has me beat, plain and simple on this particular day (rates are subject to change daily - more if the market is volatile). 

Sad…but it happens.

But, before we can even consider #3 - I strongly recommend asking for a Good Faith Estimate (and asking for the APR as well).  The loan officer should be happy to provide it and willing to share what the fees are as well - the more you know and are informed, the better off you are as you shop around.

 As always….take care -

 Daniel