Mortgage Quotes - Part 1Why do they change so much from lender to lender?If you are looking for a mortgage quote then try as you will it will be hard to find a good deal. You almost have to be an accountant and keep running the numbers everytime your broker brings back a new quote. Everything seems to change. Fees go up and your interest rates go down. Interest rates go down but fees fluxuate. There are many reasons for this, but all lenders do some juggling of the numbers to make their rates look the best. This happens because there are fixed rates set by the federal government along with several other factors that determine how much the base mortgage rate for the country is going to be. Banks and investors then charge fees and a percent (called a point) above the base percentage which they use to make a profit. The banks then advertise their rates to mortgage brokers shopping for the best terms for their clients. Many factors determine what the client will qualify for, such as: credit, cash on hand, assets, co-signers, etc. In each individual case the terms that the mortgage broker can offer stay similar because they are set by the bank rates. Mortgage brokers make their commission in several ways; either by charging a fee to the client at closing or reducing closing costs and raising the interest rate given to the client. This is why a client can pay money to the loan officer to buy down the interest rate. Essentially the client is just paying the fee the mortgage broker would have gained by raising the interest rate, therefore possibly saving money in interest over the life of the loan.
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