Frequently Asked Questions (from most frequent to least frequent)
How much money will I save with RateLab.com?
Can I pick a RateLab.com lender, but use my own realtor? Vice-versa?
Should I take a loan “with points” or “without points”?
What is an APR? Why is it different from the note rate?
Aren't some banks just plain better then others?
My Realtor prefers that I use a certain lender, why?
I am concerned about my credit. How do I know if I will get approved?
What are RateLab's requirement's for posting lender's rates online?
How much money will I save with RateLab.com?
You will save a great deal of money. Since the most popular mortgage is still the 30-year fixed, we examined our listed bank’s rates and closing costs on November 30th, 2004 – just to provide an example. Of course, you can do this yourself on any day. We are providing the information below to show you how to calculate your own price savings.
30-year Mortgage Price Comparison
| Rates on November 30th, 2004 |
 |
 |
| Purchase Price |
$200,000 |
$200,000 |
| Down Payment |
20% |
20% |
| Loan Amount |
$145,000 |
$145,000 |
| Note Rate |
5.750% |
5.750% |
| APR |
5.940% |
5.810% |
| Points / Origination Fee |
$1600.00 |
$0.00 |
| Total RateLab Savings: $1600 in mortgage + $500 with Realtor = $2100.00 |
As you can see, you would have saved at least $2100.00 on November 30th, 2004. If this were a purchase, that means that you would need to come up with an additional $2100 at the closing table without RateLab.com!
In addition to the obvious savings, Wells Fargo has a higher APR, with the same loan amount. Read more about this here.
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Can I pick a RateLab.com lender, but use my own Realtor?
RateLab.com is an informational service only. Our visitors can shop lenders on our page, find the best interest rate, and still use any Realtor they want.
By the same token, a visitor is welcome to come to RateLab.com to find a realtor, but still use their local bank if they wanted to. This would be silly however. Please read the section titled "Aren't some banks just plain better then others?"
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Should I take a loan with points or without points?
This is a subject of debate with home buyers. Some people will tell you that you should always pay points and others will say that you should never pay points.
They are both correct and they are both wrong...it depends on the situation.
Here is the correct answer- the debate ends here: If you plan on getting a fixed rate mortgage, it is generally a good idea to pay "points." This is because you can almost always get a lower interest rate when you pay points. In fact, some lenders refer to this as "buying down" your interest rate.
Basically, you are paying more up front so that you can save money over the long haul. If you are taking out a 30-year fixed rate mortgage, then you are probably planning on staying in the house for a long time. If you can get a lower rate over the course of 10 or 20 or 30 years for a little more up cash up front, you should do it!
So the short story is this: If you have no idea how long you plan on staying in the house, go to the "no points" page and pick the lender with the lowest APR. If you know that you are going to stay in the home for at least 4 or 5 years, go to the "with points" page and pick the lender with the lowest APR. Done!
What about ARMS (Adjustable Rate Mortgages)?
With ARMS, it is our belief at RateLab that you should NEVER pay points. Sure, you can get a better rate (just like with the 30-year fixed), but you won't be in the house long enough to recoup your extra closing costs. After all, you would not be taking an ARM if you plan on being in the home for the short term. (At least, we hope you wouldn't do that!)
We think that you should always just choose the lender that has the lowest closing costs.
However, if you want more mathematical certainty, read on:
On our ARM pages, we highlight the bank that has the lowest closing costs and then we highlight the bank that has the lowest rate. They are never the same bank...or at least, not in our experience. We suggest that you get written quotes from each bank. Contact the best two ARM lenders from RateLab.com and get actual written Good Faith Estimates from both.
Then, compare the two side by side. What are the payments? What are the closing costs? Take the difference in the payments and divide it by the difference in closing costs. What if one lender saves you $30 because the rate is lower, but they have $3000 in additional closing costs?
Is it worth it to save $30 per month for five years for the extra $3000 that you would pay up front?
Heck no! You would be in the 5-year ARM for 60 months and you would only save $1800 (or $30 per month for 60 months). However it cost you $3000 more in fees at the beginning!
If you need more help understanding this concept, or you need help in deciding on an ARM loan from our pages, please e-mail us at rover@ratelab.com. Include the two lenders that you are trying to decide between and we will make a recommendation based on your needs.
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What is an APR? Why is it different from the note rate?
This question always seems to confuse borrowers. It even confuses many loan officers.
In a nutshell, the APR is the interest rate with the closing costs calculated in. For example, let's say that Lender #1 has a mortgage at 5.75% with no closing costs whatsoever. The bank pays for everything. The note rate and the APR would be the same- 5.75%.
Now let's say that Lender #2 has an interest rate of 5.625%. Most people would say that Lender #2 is better because the rate is lower, right?
Wrong!
Lender #2 is charging 2 points on your loan amount of $150,000. That is, they have $3000 more in closing costs then Lender #1. The APR calculation takes that $3000 into consideration and calls it prepaid interest. Because it is part of the costs of your initial loan, the government looks at this as interest that you are paying TODAY instead of over the next 30 years.
Lender #2 has an APR of 5.810 in this situation, when you consider that extra $3000.
When you compare the two side by side, Lender #1 is at an APR of 5.75%, but Lender #2 actually has the higher APR at 5.810%! Lender #2 is the worse of the two, but they advertise a lower note rate! See how tricky banks are?
We know this can be confusing, so make it simple on yourself: Decide what type of loan that you are going to take (either "no points" or "with points") and then just pick the lender with the lowest APR. It's the easiest way.
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Aren't some banks just plain better then others?
When it comes to checking and savings accounts, yes. When it comes to having a certain teller that you enjoy working with, yes.
When it comes to mortgage financing, the answer is a most definite no.
Anyone who has had a mortgage for a while knows that mortgages get sold. In fact, they get sold a lot. So what does it matter if Bank of America provides the loan to you initially, when Bank of America might sell the loan to Countrywide six months later? There is no guarantee how long your bank will hold on to your mortgage. It could be sold on the very day that you close your new loan. It could be sold next week or next month or next year.
When it comes to mortgages- get the best deal, period. It's nice to have a loyalty to a certain bank, but believe us, they won't return the favor. Get the best deal.
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My Realtor prefers that I use a certain lender, why?
It could be any number of reasons.
The realtor may work for a broker that has their own in-house mortgage company. The realtor wants to make her boss happy, so she uses her boss' mortgage company. Makes sense, but it's certainly not the best thing for the borrower. Beware any company that offers all-in-one mortgage and real estate services. You could pay dearly for that convenience.
The Realtor may share advertising space with the mortgage company. That is, the mortgage broker gives the Realtor some cash for advertising each month and the Realtor then sends business to the mortgage company. It is an outstanding deal for the Realtor, who gets cheap advertising, but it could be a lousy deal for the borrower who gets railroaded into using a certain lender.
In a nutshell: If a Realtor pushes you towards using a certain lender, the Realtor does not have your best interests in mind. If a Realtor says, "I've used this person in the past, but I would encourage you to shop around," you've got yourself an outstanding Realtor. This is someone who cares about your best interests.
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I am concerned about my credit. How do I know if I will get approved?
Every lender uses different criteria for approving mortgages. (Please read our disclaimer.) Some are more strict then others. As a general rule of thumb however, most lenders will say that you need a 640 credit score for "A paper"- meaning their best loan products.
If you are concerned about your credit, we recommend that you follow the link below and check your score:
If you find that your score is below 640, contact us for low cost credit repair services.
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What are RateLab's requirements for posting a lender's rates online?
Lender requirements: You must have a banking license (not a broker's license) to be listed on RateLab. You must have at least 10 "bricks & mortar" branches, with branch licenses for each bricks & mortar location. We do not want fly-by-night brokers listed on RateLab.
You must have a perfectly clean record with the Better Business Bureau, with no past or current client complaints.
You must have a website in which rates are posted daily. We will not tolerate bait & switch by commissioned loan officers.
This is our policy and there will be no exceptions made.
However, if you fit our strict criteria, please contact us.
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I am a realtor and I want to be featured on RateLab.com!
We will feature a maximum of 3 Realtors per city. We have a stack of Realtors that want certain cities and we still have to input them. If you want to be featured and you want a certain territory / territories, then please contact us immediately. This is strictly on a first come, first serve basis.
We hand pick our Realtors, so please tell us as much about yourself as possible.
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