“Were in escrow to buy a home and supposed to close in three weeks. We locked in a loan at what I thought was a fair rate, but I was talking with another mortgage broker who said she could definitely get us a rate .25% lower. Do you think our first lender was overcharging us?”
***ANSWER:
Perhaps. But the lending game is more complicated than most people realize and there are many ways an unscrupulous lender can rip you off.
Here are ten possible scenarios for your situation that I can think of:
#1. Lender B is charging more loan points to make up for the lower rate.
#2. Lender B is charging a (typically) one point origination fee, but Lender A isnt.
#3. Lender B is adding all kinds of extra fees, equaling 1-2 points.
#4. Lender B has a different loan type. Perhaps its a 10-year fixed as opposed to a 30-year fixed.
#5. Perhaps Lender A quoted you based on your credit, and Lender B hasnt run your credit and is assuming its perfect.
#6. Lender B has a 10-day (or no) lock-in on the rate, vs. Lender B did a 60-day lock-in. The longer you lock in, the slightly higher your rate is.
#7. Interest rates have dropped.
#8. Youre getting an adjustable loan and Lender Bs start rate is lower, but the other variables (cap, margin, index, etc.) are less attractive.
#9. Lender B is flat-out lying to get your business and knows they wont deliver you that lower rate, but hopes youll have dumped your first lender and will just take their loan. (I see that happen all too often.)
#10. Lender B actually has a legitimate rate!
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