Is a lender with a lower interest rate always the way to go?

Question

Paid cash for my first house then financed my last two with the same broker. Right now he can get me 4% while Sebonic claims they can get me 3.7%. Their reputation is meh, though. As an alternative, I could get 3.87 from AIMLOAN, however; is it worth it?

It's a 483K purchase. It's about 14K difference over the life of the loan. So I ask, is it worth it switching lenders?

One thing I like about my broker is he is very knowledgeable and he answers the phone. I've even been in a bind on the weekend needing a pre-approval letter to go along with an offer and he was on vacation out of state and hooked me up in minutes. Part of me wants the lower interest rate, but part of me wants the guy who I know has gotten it done without problems in the past and is available to me as my lending expert damn near 24/7.

Jack B. · Answer

Alright, so I'm not the only one who thinks this way then. I just talked to my broker again and he said he can get me the 4% today and maybe lower if he get's regional involved. I think I will take the 4% and run.

Wayne Brooks · Answer

Many times these rates are an allusion....850 credit score, low LTV, rate is good only if it's closed on a sunny afternoon, which is on the 5th Tuesday of an even numbered month in a leap year......or simply have other fees that off set the rate.

Bill Gulley · Answer

No, let's just call it a sophisticated bait and switch!

Many mortgage operations use two words to describe what they do:

"Mortgage" and "Services"

There is always a cost to both  functions, often you don't get one without the other.

If you want to talk to a recorded message or some college kid getting through school or a lady who use to sell shoes, try the lower rate. If you value expertise, personal assistance, knowledge and professionalism you may have to pay a bit more. :)

Russell Brazil · Answer

Many times the lower rate is an illusion.  Is the rate being created by buying down the rate by paying points or higher closing costs? The same is conversely true with a promise of no closing costs...as that is often created by issuing a higher interest rate.  I have seen recently one lender who issued a rate to one of my clients that I feel there was no way possible for them to get that low of a rate, and I wonder if they fudged something before it went to underwriting.

Joe Splitrock · Answer

I like to stay with the same lender. I have done several deals with him and he always comes through. Last Friday we looked a foreclosure property and decided to write an offer. I called my lender and had a pre-approval letter e-mailed to me and my agent in 30 minutes. My strategy may change in the future if I outgrow my lenders capabilities, but for now it is a good fit.

@Jack B. have you tried sharing the competitive rates with your lender and asking if they can match? They may have more room to negotiate than you think. Even if they don't match the rate and you go with them, it shows your loyalty and they will likely return the favor.

Jack B. · Answer

Dag nab it my broker said rates are higher this morning. Yet somehow AIMloan is lower than last week...?

Jack B. · Answer

Interesting replies, yes I have considered just eating the cost and not worrying about it since I want the house more. AIMLOAN did come down to 3.75% today though so I have emailed my broker asking if the rates came down since we last spoke. If I can get it under 4% from him I'd def. go with him.

At a 3.75% rate we are talking about 25K over the life of the loan.

Elizabeth Colegrove · Answer

Everyone will have a different opinion.

My opinion is no lower rates is not EVERYTHING. I know many investors who chase after the lower broker and rate, than lose a house because that brokerage can't close. I have put my broker through HELL (we have done 5 loans for me, and 4 for my parents), just because there seems to always be an issue. Yet she comes through everytime. I don't have any stories about how that house would have been awesome but it didn't close it because she closed it every time.

Each to their own, but I have lost enough houses over other things, that I don't plan on losing it over a broker because he was "slightly" cheaper.

PS - that 14k is only if you keep the loan the entire 30 years and don't refinance, etc

Is a lender with a lower interest rate always the way to go?

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