William settled into his patio chair on the balcony of his rented condominium on a Sunday morning enjoying his freshly brewed cup of coffee. He opened the real estate section and the headlines read, "Mortgage Rates Fall Dramatically." William had been considering buying his first home, but the current real estate market could still be falling in value. He did not want to get into a situation where he was purchasing a mortgage at a rate now only to see it fall again next month. But the pressure from the headlines was pushing him to act.
The basis of the headline that the media was referring to was a whopping fall in the mortgage lending rate by .25 percent. Not what most people would call dramatic. While the drop does result in a lower monthly payment by a few dollars, it certainly is not enough of a reason to act unless your personal timing is right. Being guided by a newspaper can be quite difficult if that is your primary resource for making a mortgage decision. Th is may be one of your information sources, but you need to look at several to make wise decisions.
Generally speaking, the media whether it is on television, internet or print seeks to sensationalize the facts to make a point (and to sell their stories). The facts support that we may be heading in a recession, but the drama behind the story gets your attention. Likewise, a fall in mortgage rates did occur, but not to the degree that should prompt William to act unnecessarily.
In some situations, advertised mortgage rates by a media source also may be misleading. The media will not necessarily define how lenders or brokers advertise their mortgage rates. There are laws under Truth and Lending requirements that mandate advertisers to list APR (Annual Percentage Rate) and other terms in their representation, but this remains vague in some cases. As a result, some less than ethical advertisers may "fudge" a bit by advertising a lower mortgage rate that they anticipat e next week. Once you call in, the rate is not the same because their anticipations failed to realize. But now they have you on the phone hoping to still gain your business.
One method to obtain more accurate information about mortgage rates is to compare APR among different loan products while ignoring headlines, media spins, and advertised mortgage rates. But even the APR in the media can be sometimes misleading.
There is no required way to calculate the APR by federal Truth and Lending laws, so this again allows some mortgage rate advertisers to fail to disclose all the hidden fees and costs. Their advertised APR is more attractive for this reason, and you may only come to find this failure of disclosure when the Good Faith Estimate is received.
Lastly, the media offers a great deal of information from experts in the fields of economy, real estate, banking, mortgage brokerage, and politics. In collecting this information, opinions and conclusions may be made about when the best time to get the best mortgage rate is.
Unfortunately, this information is indeed editorialized to a degree either through the expert's opinion or through the views of the media person. The expressed conclusion may therefore be far from reality. The adage to not believe everything you read truly applies to mortgage rate situations.
William decided to investigate the headlines a little further by reading the article and looking at the advertised mortgage rates. But before he made a move, he sought out a reputable mortgage broker to provide some much needed guidance about what was best for him. As it turned out, William did find a great mortgage rate and term that met his immediate needs. His broker was able to sort through the maze of information not only about the mortgage process, but also the current state of the real estate market in his area. This was a more reliable source of information specific to William's situation.
Keeping informed through various media tools is of course helpful, but beware that some of the information can be misleading at times. Consider the information and the source, and be aware of what is truly factual and what may be embellished. Advertisements can be tainted especially if the source cuts corners to simply get their "foot in the door." It is always best to analyze this information along with a mortgage professional that stays on top of the current happenings in the real estate market and mortgage industry.
Craig Garcia is recognized as one of the Nation's leading experts on Mortgage and Equity Management. He is a Licensed Mortgage Lender who has been helping consumers with financing solutions for over the past ten years.
He has created a service that caters to homeowners and purchasers who are frustrated with strict bank lending practices and are rightfully mistrustful of mortgage brokers but who still want to finance their home confidently. His service helps consumers find a mortgage that helps them manage their equity and monthly budget most effectively with their financial goals. See Current Mortgage Rates here. He also writes a blog for Real Estate Investor Loans. Residential Mortgages, Commercial Mortgages and even Hard Equity loans are available at Bridge Capital Lending, LLC.
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