Don’t Trust “Liar” Interest Rates
Interest rates are always a HOT topic, but you need to make sure you are getting accurate information! Yes, rates are important, but there is always fine print!
Weekly Rate Sheets
Some local competitors send out a weekly rate sheet. Realtors occasionally ask why we don’t send out a rate sheet. It’s a great question, and the simple answer is…they are RARELY accurate. They often say right on them, “not to share with borrowers.” If you can’t share with a borrower, what’s the point? The industry jokingly calls them ‘liar’ rates.
While we don’t show a weekly rate sheet (because, again, it would be useless)—what we can tell you is WHY these rates wouldn’t be accurate, HOW we do things differently in the best interest of our clients, and WHAT we see trending in the qualification environment right now that may give borrowers peace of mind.
“Liar rates,” is an accurate name for these inaccurate rates. Why? Because interest rates have many moving parts behind them—credit score, property type, lock period, loan type, etc. There is no “overall” or “average” rate that you can point to definitively because it could lead borrowers astray and not do them any favors in the long run. What may be true for one borrower will be completely false for another, and borrowers should come in with no preconceived notions to avoid feeling misled at any point.
That’s why we do things differently—we don’t want to share “false” information with realtors OR borrowers. Instead, we work to get the best possible rate for each client, depending on each circumstance.
Here at RMN, we are a mortgage bank (not a broker). We sell to eleven servicing companies, getting rates from each of these investors—which is why we are very competitive.
This means we can get our borrowers the best options without luring them with inaccurate numbers. Giving folks the promise that we will work with them diligently to find the best rate for their circumstance IS something you can share with borrowers! So much better than a rate sheet, right?
It’s also good to know that while the rates are rising, the qualification environment has actually slightly improved, in the sense that it is currently easier to qualify to some degree. In a time with higher rates, this is good news for borrowers.
Why is this? Automated Underwriting Systems have increased their debt ratio tolerances to allow borrowers to qualify for higher price points. These are not “bad” loans or low credit loans—all it means is that borrowers get a little more wiggle room!
What is an Automated Underwriting System?
We have noticed that the qualification environment has been slightly easier because the loans we have run through the AUS lately have been approved for higher price points. This was even a topic at a recent housing conference we attended. But what is this system, and why do we use it?
Automated mortgage underwriting is the process where advanced artificial intelligence (AI) technology electronically undertakes the decision-making process for granting mortgage loans by analyzing one’s credit report.
Part of the approval process for borrowers is to have loans run through this AUS, where the technology analyzes the information and produces an “approval” or “denial.” Rest assured, this is a good thing, especially with the system increasing its debt ratio tolerances as of late!
While it might seem nice to have a general idea of rates from a rate sheet, it’s much better to have accurate information based on your own specific scenario. So give us a call or shoot us an email! We’ll customize a rate based on your circumstance— something considerably more reliable than anything you’d be getting from a weekly rate sheet.