Advertised Mortgage Rate: Don’t Believe the Sharks
When you are looking to buy a property for the first time, you may be drawn in by the great advertised mortgage rates. Unfortunately, advertised mortgage rates are not always as they seem. There are many reasons the advertised mortgage rates may not be applicable to you, and in most cases there are very few who can take advantage of the great rates you see posted online. Just read the fine print. I would like to tell you why and how you can get the best mortgage rate for your circumstances.
The first affecting factor is paying points. A point is a fee equal to 1% of the loan amount. If you are borrowing $100,000 a point is $1,000. Most of these rates have you paying two points. That is a huge cost!
The second is your credit score. A higher credit score generally means you will be more likely to receive a lower rate than someone with a lower one. A moderate credit score is about 695, but you would often need a score of above 740 to be eligible for the advertised mortgage rates.
Your credit score can differ from one credit bureau to another, which means it can be difficult to find out your own credit rating accurately. Although many lenders will use FICO, there are others that will use another credit scoring service such as Experian or TransUnion. They are all rated in different ways, for example Equifax have a score from 280 up to 850 but Experian’s goes from 360 to 840.
The term of your loan is also a contributory factor. If you take out a loan under 20 years you would pay a lower rate than you would if you were to spread repayments over 30 years.
We can help you to get the best rates possible for your circumstances. As brokers we can choose from many lenders based on what you qualify for and have the tools to find out in real time. Many of the offers are time sensitive so it is important to have someone professional on your side who can keep you abreast of the changes.
We choose not to post any advertised mortgage rates as they just don’t make sense. We take a personal approach and don’t bait and switch.
When you feel the time is right to take out a mortgage on your future home or investment property give us a call.