Shopping For Best Mortgage Rates California On Home Loans

This BLOG On Shopping For Best Mortgage Rates California On Home Loans Was UPDATED On November 22nd, 2017

California is the nation’s most populous state. Many counties in the state of California is classified as high cost areas. FHA, VA, and Conventional Loan Limits are substantially higher than other parts of the country on high cost areas.

  • California also has one of the nation’s highest home values
  • Average loan size in the United States is $227,500
  • Average loan size in the state of California is $473,238 versus $227,500 nationwide
  • With California having double the loan size than the rest of the country, every uptick in mortgage interest rates could mean tens of thousands of dollars.
  • Shopping For Best Mortgage Rates in California means huge savings to the homeowner

How Do Borrowers Go Shopping For Best Mortgage Rates California

Many mortgage loan borrowers naturally go shopping for best mortgage rates, especially when refinancing their current home mortgage loan.

  • Unfortunately, there are so many misleading advertisement out there where the intent of mortgage lenders is to lure the mortgage applicant in and do a bait and switch
  • Many California homeowners get mailers offering ridiculous low mortgage rates
  • Advertising when shopping for best mortgage rates by advertisers is highly regulated by the individual states
  • Advertisers of mortgage rates advertise their mortgage loan programs like car dealers do
  • When homeowners go shopping for best mortgage rates advertised under 3.0% from mortgage companies, one of the things in the fine print that homeowners may need to pay points to buy down the mortgage rates
  • When shopping for best Mortgage Rates, shoppers or anyone viewing the advertisement, especially television or cable tv advertisement, do not post these disclosures in larger print nor do they give viewers enough time for the viewer to review it

Oldest Trick In The Book When Shopping For Best Mortgage Rates; Bait And Switch Advertisement Method

The main goal from advertisers of mortgage rates is to have the viewer call in to their mortgage company and speak to a live person.

  • As mentioned earlier, homeowners may see mortgage rates advertised at 2.75% when par mortgage rates are actually at 3.5%
  • To get a 2.75% mortgage rates, homeowners  might have to pay 5% points or more
  • Maybe it may not even be possible to get those mortgage rates 
  • When the viewer calls in to the advertising mortgage company, the person taking the call will probably take the mortgage application, run credit, and avoid discussing mortgage rates
  • Nobody can offer a public mortgage loan applicant a given mortgage rates unless a licensed mortgage loan originator has fully qualified the mortgage loan borrowers with the following:
    • Income
    • Asset
    • Debt
    • Liabilities
    • Credit history
    • Credit scores
    • Debt to income ratios
  • Mortgage lenders are not like used car dealers
  • Lenders cannot be offering mortgage rates with huge spreads without qualifying the mortgage loan borrowers full credit and financial profile
  • The mortgage rates quoted is also not a guaranteed until the mortgage rates have been locked

Locking Mortgage Rates

Most mortgage loans are normally closed in 30 days from the time the mortgage loan originator gets the proper signed mortgage application, disclosures, and mortgage loan documents.

  • The maximum lock period to lock mortgage rates is 30 days
  • Short term pricing and locking of mortgage rates are of no use to the mortgage loan borrower unless the closing will be done within that short term period

Short Term Mortgage Rate Lock

Mortgage rates are much lower for a shorter term locking period.

  • An unethical mortgage loan originator may quote homeowners lower mortgage rates on a 7 day lock fully knowing that they cannot close the deal in the 7 day period and need to re-lock the loan at higher mortgage rates or pay points after the lock period expires
  • This is against the law but many mortgage loan originators still practice this unethical act in order to lure a mortgage loan borrower to their company
  • Bait And Switch Tactics is not ethical and many times illegal

Annual Percentage Rates ( APR ) Is Easily Manipulated And Can Be Misleading When Shopping For Best Mortgage Rates

The Annual Percentage Rates which is also known as the APR is easily manipulated and can be misleading to mortgage loan borrowers

  • The APR is the cost and fees associated in a mortgage loan borrower getting that loan but many mortgage lenders will manipulate the APR by not including certain third party fees and disclosing it that the borrower will pay outside closing or eliminate such fees altogether
  • Although the APR can be helpful in many ways, do not count on it
  • Ask the mortgage lender what they charge in points and origination fees. 
  • If it is zero, you are in excellent shape
  • Ask mortgage lender what points they charge, if any

What Is Loan Level Price Adjustments On Mortgages

Loan Level Pricing Adjustments are additional costs and fees assessed to mortgage loan programs. What this means is that lenders will attach an additional premium, higher mortgage rates, for the following:

  • FHA Jumbo Mortgages in high cost areas
  • VA Jumbo Mortgage in high cost areas
  • Conventional Loans in high cost areas
  • Two to Four Unit Properties
  • FHA 203k Loans
  • Lower Credit Score Borrowers
  • FHA or VA Manual Underwriting
  • Higher Debt To Income Ratio
  • Less than 20% down payment on Conventional Loans

Just because mortgage borrowers have 740 credit scores does not automatically qualifies them for par pricing. Loan Level Pricing Adjustments takes into effect depending on the borrowers credit and/or financial profile or the property.

Home Buyers who need to qualify with a five star direct lender with no lender overlays on government and/or conventional loans, please contact The Gustan Cho Team at USA Mortgage at 262-716-8151 or email us at gcho@usa-mortgage.com. We are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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