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Sunday, April 22, 2007
Roger Schlesinger :: Townhall.com Columnist
Why do people shop interest rates?
by Roger Schlesinger
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Before you start typing and formulating your thoughts and curses please understand one important fact: rates are made up of anywhere from seven to ten factors and posted rates,in the overwhelming majority, will not apply to you.

If that isn't enough to make you wonder , then how about the fact that rates can change 3 or 4 times in a given volatile day? Now add in the notion that one lender doesn't have the best rates for every type of loan, so you may be looking at a lender's rate which is terrific for the loan they are quoting but won't be very competitive for your type of loan. What is a person to do?

Start with trying to find out something about the broker or lender. One can go onto these companies' web sites and see what they have to say. If it seems "less than moving" or touting loans you are not interested in, or shouldn't be interested in , as in the "option arm",then move on.

What are the factors that make up a loan. Let me list them and perhaps you will understand what I was talking about in the opening paragraph.

1. Size of loan - Conforming limits, jumbo limits or super jumbo limits

2. Purpose of loan - purchase, rate and term refinance or cash out refinance

3. Type of property - owner occupied, second home or investor: 1 to 4 units

4. Qualifying for the loan - full documentation, stated income or no documentation

5. Credit profile & score - over 700, 620-700, 545 to 620 or over 500, under 545

6. Impounds (taxes & insurance) or no impounds

7. Loan to Value

8. Type of loan - fixed or variable

9. Fully amortized - 15 year, 20 year, 30 year, 40 year or 50 year Continued...
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About The Author

Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.

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(4 comments so Far)
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Reply # 1
Date: Apr 23, 2007 - 9:25 PM EST
Usury
Kind of an ugly buzz work isn't it? In the first place the rates you quote are totally unrealistic in today's money markets. Most long term rates are far below eight percent. Homes or auto or commercial.

I am a little confused. What happens to all that interest that is being charged? Does it evaporate? Is it stored somewhere in a dumpster? Or does it go to paying overhead and costs of doing business for the banks or lenders, the employees (which creates jobs) building bank buildings (More jobs) or going to shareholders which creates capital to grow more jobs.
I don't want to say this, but the overtone of your "essay" (screed) seems to have muslim overtones. Zionist and usury. Both nasties in the muslim world. And of course in that world business is booming!!! Heh Heh
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Reply # 2
Date: Apr 23, 2007 - 3:57 PM EST
"Only Truth", what's your point?
Nobody forces anybody else to take a loan at any interest rate. People choose to do it. Some people are happy living in an apartment, others want to move into a house, but don't want to wait the 20 years it will take to save enough money to purchase the house outright. Making the claim of "usury" when talking about the mortgage market is simply ridiculous. People are free to decide whether they want to take on this debt or not, and they are given a good-faith estimate from the get go showing them how much they will pay over the life of the loan. Why do you want to give them a pass and dismiss them of all personal responsibility? Take away interest, and you take away the ability for most people to own a home. Would you feel better then?
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