Our Low Rates

Our rates and costs are lowest.  Why are we so sure?

          

by Keith Luedeman, CEO

 

There really is no magic or mystery in the mortgage business - though the average lender wants you to think there is.  The simple fact is - the lowest available rate is the same from every lender, on any given day.  

 

"So," you ask, "why can I call 4 different lenders on any given day and get four different rate quotes if rates are the same?"

The simple answer is greed on behalf of the lenders.  (though the loan officer on the phone may not know this - so don't shoot the messenger)

 

A little known secret of the mortgage business is something called Yield Spread Premium.  Let me explain...

Most people know about discount points.  The ability to buy the rate lower by paying an extra percentage of the loan amount.  

 

The reverse is also true.  If a lender gives you a rate higher than the qualifying rate, the lender is paid extra when the loan is sold.  Depending on how much the lender can get you to accept in extra rate determines his extra profit, or how much he can lower the closing costs by convincing you to take a higher rate and lower costs, and pocket the difference.  So you are quoted different rates.

 

The qualifying rate changes daily, just as rates for bonds change.  This qualifying rate is called the Par Rate.  You cannot get a rate below Par without paying discount points.  And the lender makes yield spread if they provide a rate above Par Rate.  
  
Keep in mind that most lenders charge a 1% origination fee, though this varies by state - this is why rates are higher in New York - the standard is 0% origination in New York.  The lender earns their money by giving you a higher rate than Par Rate.  1% is fair for good service and a great rate.  2% is not.  There are certain costs that a lender or broker has to cover.  Doing business for free is a going out of business strategy (note the dot-com bust of 2000 that put our country into a recession).  

 

That's why when we quote you a rate, we know it is the lowest rate available for your situation.  If you are quoted a lower rate, the lender is probably hoping that rates drop by the time your loan closes.  They definitely aren't gambling on doing business for free.  FYI - We don't believe in gambling with your money.  

 

Most lenders quote rates making at least .5% in Yield Spread, in addition to the 1% origination.  That means you will pay much, much more over the life of the loan.  Be careful.

Another secret is that closing costs are very similar from lender to lender.  If someone quotes lower closing costs than ours, I'll bet their rate is higher.  They do this by using the Yield Spread Premium to pay some of the closing costs.

Keep in mind that we can do this also, and still give you a lower overall rate and costs.  Or we can pay all of your closing costs with a high enough rate.

But that's not always best for your situation.  It depends on how long you plan on being in the home before selling.  We can examine the options and provide advice depending on your particular situation.

 

The overall result - we know our rates are lowest.  And the rate we lock you at will be the rate that you close with.  No surprises.

 

Click here for the national averages - you'll see we're lowest.  
 
Click here to apply online.
 

 

 

This commitment is evidenced by our record at the Better Business Bureau, our membership in the TRUSTe Privacy Organization, and awards for customer service.