Borrower: I Found A Lower Rate Online

Prospect: “I'm not sure why, but I went online, and I found an interest rate that is pretty substantially lower than yours. Can you tell me why?"

You: "Well, Mr. Smith, first of all, thank you for telling me and letting me know. Without seeing what you saw, I can't really give you specifics as to why, but if I'm honest, they actually should be lower, and unfortunately, they have to be lower. I'll address that here in a second. But one of the things I want you to understand is oftentimes when rates are quoted online, they're quoted as attention grabbers. They're quoted to where people want to be drawn to the lowest potential interest rate.”

"Now, let me show you something, if you don't mind, that will help you understand that. I'm going to take you to the website of the nation's largest lender. They help more families with their mortgages than any other mortgage company in the country. So obviously, they can't be overly expensive, or they wouldn't have that level of market share. So, if I just look at their interest rates, today, it shows a 7.875% on a 30-year fixed mortgage. Now, that may be an attractive interest rate. The problem is it doesn't show all of the fine print as to what that interest rate entails, what the qualifications need to be. So if you click on the more information button, it'll show this interest rate actually comes with two discount points. So, on a $400,000 loan, that means that you'd pay $8,000 extra dollars to get that interest rate, and you also have to put 25% or a little more than 25% down on that mortgage. Now, you may or may not meet that criteria. We still need to figure out your down payment. We still need to figure out how to structure the cost.”

"The reason why this is really important is because ultimately, at the end of the day, Mr. Smith, you're going to choose your interest rate. We're not going to assign one to you. We're going to show you interest rates with multiple points, with no points. We'll show you interest rates where you actually may have a very low closing cost.”

Now, one of our strategies is that when you write an offer on a property, we're going to ask for the seller to pay some of those points so you can get a better interest rate. Then, knowing you're not going to have that rate for a very long time, we're going to manage it to the lower interest rate at some point in the future.”

"So all this is to say, you're absolutely going to find lower interest rates online because that's what online marketing is meant to do. It's meant to make the phone ring, and then they'll say, 'Well, Mr. Smith, that rate doesn't apply to you because it takes two points, and it takes so on and so forth.' I just don't want you to get your hopes up thinking there's better or lower interest rates than what we're offering today. I think we're highly competitive.”

"But back to the question of why were they lower to begin with, and I said they should be, it's because you'd be comparing apples versus oranges. You'd be comparing an online mortgage company that their only thing they're offering is a mortgage. They don't have a before strategy on how they're going to help you get your offer accepted, how they're going to educate you, how they're going to do all those things. Their during strategy is pretty minimal. It's just close your loan, maybe on time, maybe not, maybe good customer service, maybe not. That has to be determined.”

"The most important thing is that there's no long-term or after strategy. So you're going to own a home, but everything that we've discussed earlier is going to be on your shoulders in order to become a successful homeowner. Because they don't do any of that, they have to be cheaper. Just the same way that anything you buy that has value is likely going to cost a bit more, but you'll never overpay if you see that value.”

"Again, I know we talked about this earlier; if you want to go back and side-by-side comparison an online mortgage lender, what they're offering versus what we're offering, my goal is not to sell you anything. It's just to give you the information so you can make the most educated, confident decision on the best lender for you. I do believe that's us, but I want to help you better understand that."