Do not trust or automatically rely on any advertised interest rate when shopping for a mortgage lender.  It is far more important for you as a home buyer, especially if this is your first home purchase, to work with an experienced and trusted mortgage lender who can properly advise you and guide you through the home mortgage process.  Most interest rate options are pretty close from one lender to the next and even if the mortgage lender you have selected is a little higher than an online lender or large banking institution, the peace of mind you get from the personalized and professional service you receive will be well worth the additional cost.  You pay extra from quality products and services in most other areas of your life, I highly recommend you do the same for one of the largest purchases of your lifetime, your home.

Here are the basic parameters of most advertised interest rates:

• Owner occupied purchase
• Single Family Home
• 740+ FICO Score
• 25%+ Down payment
• Conventional loan
• 21-30 day rate lock
• Typically at least 1 discount point to “buy” down the interest rate

Even if you fit into the nice, neat little tidy box described in the above parameters, the advertised rate may still be unavailable to you for the following reasons:

• Outdated pricing not currently available
• Pricing not available in your area or locality
• Other hidden fees or costs are involved in order to obtain that interest rate
• Other requirements exist that make the rate and terms of the program unavailable to you

Your best practice in selecting a lender is to start with the recommendation(s) of your real estate agent.  As long as your real estate agent has been in the business long enough to develop a track record of success in working with home buyers, he or she will have developed one or more relationships with trusted lenders to refer their clients to for financing.  Both the lender and the real estate agent may have been working together for years and the agent has full faith in the lenders ability to perform and provide excellent service to their home buyers.

If you are home shopping online and selecting your lender based on their advertised rates or programs, you are likely to be disappointed with the mortgage approval process.   Many of these institutions can offer lower rates because they are typically staffed with inexperienced loan officers that work in “call centers” and process loans like ordering a burger from a fast food chain.  For a purchase as important as your home, it is recommended you employ the services of a highly skilled mortgage professional to handle your financing and advise and guide you from start to finish.  If you want to determine where you stand with lenders that advertise “too good to be true” interest rates and verify if you have access to the advertised rates, there are some questions you should ask them:

• What FICO score is required to obtain the advertised interest rate?
• What down payment is required?
• What property type is advertised, single family home and condo, or just single family home?
• What loan program is advertised and is it available in my area.
• What are the discount points and origination charges involved in obtaining the advertised rate?  Each point is 1% of the loan amount in cost to obtain that rate.
• What is the advertised rate lock period?  If you are buying a home with a 45 day closing, a 21-30 day rate lock won’t be long enough for you.
• What is the effective date of the advertised rate and is it still available?

Any lender you contact should be able to answer ALL of those questions based on the FICO score you tell them and the parameters you provide based on your situation.  If the lender requires that you complete a loan application and check your credit report before providing that information to you, go somewhere else!