July 9th, 2010 2:21 AM by BILL WILBANKS
Once in a while I am reminded by day-to-day life that the old axiom about "Assuming" anything is wrong as often as not. You guys out there will appreciate those times when you have thought all day about that last morsel of special cheese that's been aging in the back of the frig growing fur just waiting for you to ponce on it on one of your late night jaunts to the icebox. You assumed it would still be there only to find that your special someone has file thirteen'd it for the sake of the families health.
Here's one that can cost you big time: many times a customer may assume their current lender will look out for them and give them their best mortgage deal. That's great if they really do, but generally won't in my experience, check with them of course, don't let your assumption of what is correct stop you from shopping the truth. I see this type of thing all too often. Most of the time the lender can't or won't compete on price on the low end of the rate pricing and points scale. Why,because they believe you'll come back since they have you now, even with their slightly higher price and doubt you'll shop around. So, they naturally will try to upsell you to a rate buy-up bragging about "No Closing Costs". What's that about you ask? That's when you agree to a rate that is typically .375% to .50% higher than the standard zero point quote out there ( though just today I heard one quoting a full .75% higher on that rate to a present customer). Since they earn more money by selling you the higher rate they can cover your closing costs which can be as much as 2%+/- of the mortgage amount. So are they free? Of course not. But it could work out for you to do a buy-up with someone for the right quote if your plans are short term for sure. The spread required to cover your costs will vary daily. Shop around for both options, the lower zero point rate and the buyup. Typical lender rates tend to be .125% to .25% higher on both ends of the spectrum almost daily, as they leverage their "Name", than a brokered program and may even get sent to the same lender. Make a few calls (be sure to include us for certain). It's easy to prove it to yourself today.