Mortgage rate at 6.5-6.7% for a 5% down

[Adam Pervez]

Hi,

I have worked with a few lenders and have been seeing rates for a 5% owner occupant conventional loan floating around 7.1 - 7.3%. I recently got in touch with a smaller bank that is able to do a 6.5% interest rate. Is that normal? Everything I was being told sounded too good to be true and makes me wonder why most people aren't doing this. Wanted to see if anyone has had any similar experiences with credit unions or smaller banks that originate their own loan. 

[Robin Simon]

Quote from @Adam Pervez:

Hi,

I have worked with a few lenders and have been seeing rates for a 5% owner occupant conventional loan floating around 7.1 - 7.3%. I recently got in touch with a smaller bank that is able to do a 6.5% interest rate. Is that normal? Everything I was being told sounded too good to be true and makes me wonder why most people aren't doing this. Wanted to see if anyone has had any similar experiences with credit unions or smaller banks that originate their own loan. 

 Yes, this is pretty normal - generally conventional loans like this are super competitive (since everyones essentially offering the same product) so shopping and finding some deals especially with smaller banks and brokers can yield good rates well under the "prevailing headline market rates"