Surfing the Web is a great way to get a feel for loan options and rates, and you can even get a good loan over the Internet. However, the biggest caveat to watch out for is teaser rates. As mentioned before, a teaser rate is lower than the current market rate.
The lender will try to make up the loss with padded fees or not be able to deliver when it’s time to lock in the advertised interest rate.
For instance, if the financial markets are quoting mortgage rates at 6.0 percent that day and a Web lender hits you with 5.90 percent to get you to respond to its ad, you’ve encountered a teaser rate. You can be sure the mortgage company isn’t going to lose money, so it will make this up in the closing costs or discount points. If in your surfing, you find a Web lender that’s a national bank or mortgage company, it may refer you to a loan officer at one of its branch offices closest to you. Other lenders may handle everything by mail, phone, and e-mail, with the closing handled by a local title company. Either way can work out.
The lender will try to make up the loss with padded fees or not be able to deliver when it’s time to lock in the advertised interest rate.
For instance, if the financial markets are quoting mortgage rates at 6.0 percent that day and a Web lender hits you with 5.90 percent to get you to respond to its ad, you’ve encountered a teaser rate. You can be sure the mortgage company isn’t going to lose money, so it will make this up in the closing costs or discount points. If in your surfing, you find a Web lender that’s a national bank or mortgage company, it may refer you to a loan officer at one of its branch offices closest to you. Other lenders may handle everything by mail, phone, and e-mail, with the closing handled by a local title company. Either way can work out.
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