Why A California Mortgage Quote Is Sometimes Higher - And Why It Doesn't Have To Be - part 2
by Paul Lerner
Common Lending Scams It is not possible to find a lender with 7% while the majority of lenders have their rates at 7.5% for the same total coast on the very same day. The quote is primarily intended to convince you to go ahead with your application. Later, at the time of locking in rates, what you get is exactly the same as everybody else.
Basically the low rates cannot be locked until the time of approval. Then the rate is locked for a very brief duration till the time you close. The average period is around 10 days. During the time it takes for the approval to come through, the rates can change. It's easy for any lender to quote a lower rate on a short lock. On your part you need to realize that the rate risk is a very real one during the loan process.
Many lenders are also likely to charge high fees for being able to give you lower points. Such fees cannot be deducted unlike points which can. Thus the effective rate becomes even higher in such a situation.
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