Q&A: Why the Rate in the Headline Is Not the Rate Your Lender Quoted You

This one shows up the same way almost every time. A buyer reads that mortgage rates hit some number this week, applies with a lender, and gets quoted something different. The question that follows is some version of: did I get a bad deal, or is the headline wrong? Usually the answer is neither. Here is the plain version.

A published mortgage rate is an average. It is built from surveys of lenders pricing a model borrower: a specific credit profile, a specific down payment, a conforming loan size, a particular loan type, and often a set amount of points paid up front. That model borrower is useful for tracking the direction of the market. It is not you. The headline is a weather report. Your quote is your file.

Your file is made of a handful of inputs, and each one moves the number. Your credit score is the big one. Your down payment, which sets the loan-to-value ratio, is next. Then the loan program, since conventional, FHA, VA and jumbo loans each price differently. Then whether you pay discount points to buy the rate down, how long you want the rate locked, and the property type and occupancy. Lenders also price from their own costs, which is why the same file can get three different quotes from three lenders on the same day. That is not a sign anyone is cheating you. It is a sign you should shop.

Here is the short list I walk buyers through.

First, get written quotes from two or three lenders on the same day, because pricing changes daily and a Monday quote is not comparable to a Thursday one.

Second, ask each lender what assumptions went into the quote: credit score used, down payment, loan type, points, and lock period. If the assumptions differ, the rates are not comparable.

Third, compare the full cost, not just the rate. A lower rate with more points and higher fees can cost more over the years you actually plan to own the home than a slightly higher rate with fewer fees. Ask the lender to walk you through the loan estimate line by line.

Fourth, decide when to lock with the lender, not with a headline. That depends on your timeline and your comfort with the number moving, and it is a licensed lender's conversation.

The thing most people get wrong is treating the headline as a promise. It is context. Your credit, your down payment, your loan program and your lender's pricing produce the number on your paperwork. Work on the parts you control, shop the rest, and read the estimate before you sign.

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This is general information, not legal or tax advice.

Jon Hegreness, REALTOR / Associate Broker, Howe Realty
(623) 826-0888 / JonHegreness@gmail.com / License BR540940000
9059 W Lake Pleasant Pkwy, B-200, Peoria, AZ 85382
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