"read my comments below this article"
NEW YORK (CNNMoney)By Les Christie -- A 4% mortgage sounds too good to be true -- and for more than 90% of borrowers, it is.
The average rate for a 30-year mortgage dropped below 4% earlier this month for the first time, hitting 3.94%, Freddie Mac reported.
But at the same time, LendingTree reported that the average rate offered to borrowers by its network of lenders was about 4.32%.
Only about 9% of LendingTree borrowers got loans below 4%. About a third got loans between 4.5% and 5%.
Those rates are still low, but a half point rate difference adds about $700 a year to the payments on a $200,000 mortgage.
There are a couple of reasons why so few borrowers get the best deals. One is that Freddie Mac surveys lenders, and the rates they quote apply to borrowers with flawless credit, ones with high credit scores and who put down 20% or more. The LendingTree numbers reflect actual loans that borrowers got.
There's another factor in play, too. The low rates draw in a flood of current homeowners looking to refi. Nearly 80% of all mortgage applications lately have been to refinance existing loans. The rush of applicants can drive up rates.
"Lenders quickly become flooded with volume and can adjust rates to slow their pipelines," said Doug Lebda, CEO of LendingTree.
The industry can handle less volume than in the past. After the housing bust, many lenders closed their doors and large numbers of loan officers and other workers left the industry. Many lenders are understaffed and can be easily overwhelmed with applicants.
When that happens, according to David Adamo, CEO of Luxury Mortgage, the banks discourage borrowers."They expand their margins and that sends rates up," he said.
NEW YORK (CNNMoney)By Les Christie -- A 4% mortgage sounds too good to be true -- and for more than 90% of borrowers, it is.
The average rate for a 30-year mortgage dropped below 4% earlier this month for the first time, hitting 3.94%, Freddie Mac reported.
But at the same time, LendingTree reported that the average rate offered to borrowers by its network of lenders was about 4.32%.
Only about 9% of LendingTree borrowers got loans below 4%. About a third got loans between 4.5% and 5%.
Those rates are still low, but a half point rate difference adds about $700 a year to the payments on a $200,000 mortgage.
There are a couple of reasons why so few borrowers get the best deals. One is that Freddie Mac surveys lenders, and the rates they quote apply to borrowers with flawless credit, ones with high credit scores and who put down 20% or more. The LendingTree numbers reflect actual loans that borrowers got.
There's another factor in play, too. The low rates draw in a flood of current homeowners looking to refi. Nearly 80% of all mortgage applications lately have been to refinance existing loans. The rush of applicants can drive up rates.
"Lenders quickly become flooded with volume and can adjust rates to slow their pipelines," said Doug Lebda, CEO of LendingTree.
The industry can handle less volume than in the past. After the housing bust, many lenders closed their doors and large numbers of loan officers and other workers left the industry. Many lenders are understaffed and can be easily overwhelmed with applicants.
When that happens, according to David Adamo, CEO of Luxury Mortgage, the banks discourage borrowers."They expand their margins and that sends rates up," he said.
The above article is a great example why working with myself and Sound Mortgage, Inc. is better than trying to get a mortgage from a company like Lending tree, which by the way did you know that Lending Tree's business model is just to capture your interest in getting a loan and then selling the lead to three lenders, yes that's right they do not loan you any money at all!
Getting you the best possible rate in the market is and always has been very important. Many factors effect risk based pricing that Fannie Mae & Freddie Mac provide. Examples; credit scores, debt to income ratios (DTI), loan to value (LTV) etc. Other loan programs i.e. FHA, VA and USDA do not have the same risk based pricing adjusters as Fannie & Freddie and recently have been lower mortgage rates than conventional loans.
Please feel free to contact me to discuss all of your options and loan programs. No two borrowers are alike so the "one loan fits all" approach is never a good thing.
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