Advertised Interest Rates

Whether you see them in the paper, on the internet, hear them on the radio, etc. I am amazed by how many people see the rate and then ask for it without any other due diligence.  Just like any advertisement there is the fine print or with radio the incredibly fast talking at the end.

The rates advertised are typically for lock periods of 15 days, loan to values at 80% or less (sometimes 60% or less to make their rates look better), paying points, and sometimes even hedging their bet that rates will drop and that rate will actually exist.  My favorite quote is from Winston Churchill, “If you don’t read the paper you are uninformed if you do read the paper you are misinformed.”

Rates change multiple times a day.  Here is a video that can help you understand this better http://www.youtube.com/watch?v=vj8bZGkMST0.  I follow mortgage-securities real-time everyday through Mortgage Market Guide which is mentioned in the video. 

Have you ever seen a car payment advertised and you went to buy the car and it was much more?   I know I have.  I remember a 5 Series BMW I wanted to buy and they advertised it at $449 per month so I went to the dealership and by the time all was said and done it was $856 per month.  Okay, okay, I did have it priced out with some “extra” items but to really get that low payment you have to qualify, put money down, and get the bare bones minimum.  Come to think of it if someone is quoting much lower than what is out there guess what?  You will get what you pay for or it might not even be a rate that exists yet.

Here is Freddie Mac’s link for their weekly survey http://www.freddiemac.com/pmms/release.html?week=28&year=2010.  Each Thursday they come out with AVERAGE rates for the week ENDING.  What no one seems to do is read the full article.  It is an average for the whole country and paying no points.