In these times of historically low mortgage rates, it is not uncommon to see advertisements for rates below 4 percent. However, actually getting that low rate is easier said than done.
The Wall Street Journal reports today that the “gap between the lowest advertised mortgage rate and the average rate that borrowers actually get is as high as it has been in two years,” with advertised rates as low as 3.75 percent versus average rates of 4.39 percent. The number of borrowers who end up getting the 3.75 percent mortgage is quite low, and it is not because of issues like poor credit scores.
From the WSJ:
It is more reflective of changes in the way lenders approach their business. Lenders have raised their profit margins by 1.5 to 2 percentage points in the past month, according to Informa Research Services, by offering borrowers slightly higher rates. Lenders say they haven’t lowered rates further because, simply, they don’t have to. The mortgage market is not the cut-throat business of years past. Most lenders are happy to make mortgages but not at any cost.
The idea that advertised rates are frequently too good to be true is nothing new, but if indeed there are 3.75 percent 30-year loans out there, who is getting them? Those with perfect credit history who are willing to pay points?
This article originally published at http://dc.urbanturf.com/articles/blog/dont_bank_on_getting_the_lowest_mortgage_rate/4093
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