The Lending Maze

Nannette Rodin DiMascio DiMascio
Realty ONE Group
(702) 498-2445

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The Lending Maze

Have you gotten an interest rate quote from a lender or mortgage broker lately? Have you requested a Good Faith Estimate of Settlement Charges to help you compare offerings from the multitude of mortgage companies? Are you starting to feel confused?

Unfortunately, the lending industry is not as straightforward as we would like when it comes to quoting interest rates. Why not?

A 30 year fixed rate mortgage is straightforward. It is difficult to find a lender who is 1/2 to 1 percent lower than the others. Your credit rating and financial situation makes your loan different than the next person, but if you shop around, the percentage rates should be very similar. What starts to confuse the issue is the lender's fees. You may get a whole percentage point lower rate from company A, but they will charge you the equivalent of company B's rates in a different way. These other fees include Application Fees, Broker fees, Administration fees, Document Fees, Funding Fees, etc.

To get to the basics, compare lender or mortgage broker fees and nothing else. Title fees, attorney charges or recording fees are independent of your mortgage lender.

Ask for the exact same rate quote from all prospective lenders in 1/8th increments. “Please give me a good faith estimate for my loan at 5.25%, 5.375% and 5.50%.” This will help eliminate some of the gray area between points and no points along with additional fees that may appear between rate spreads.