Beware Zillow and the online quoters

I have listened and read with great interest the debate that I see unfold every day on Zillow and other platforms that mimic what it does. In theory it's great, submit quotes anonymously and see which lender is the best for you. Problem is so many of the quotes are considered by me and many others to be bogus. Now there is a debate about what a bogus loan quote means; is it an absurd lowball quote or is it a quote with 2,3 or even 4 points and origination fees baked into the loan? What's worse is people focus on the wrong things when they look at the lowball quotes. They focus exclusively on the rate instead of seeing how the lender arrived at the rate and what is COSTS to get to that low rate. Considering the average American moves or refinances every four years ago paying all the fees that get pushed on them doesn't make sense for the average borrower. On a 417k loan that is the conforming limit around DC, MD and VA that would be a cost of $12,510 PLUS the other closing costs that come with any loan. The smart way to figure out if this makes sense for you is to divide what you save by the estimated time you believe you will spend in the home. So if you get a rate of 5.0% with no points and 4.0% paying a large upfront fee you save $248 per month. However you will need to live there 50 months or just over 4 years just to recoup the money you spend on the points. That doesn't include the other fees which run a few thousand dollars depending on where you live. So more like 6 years. Now if you know for sure that you will live there 10-15 or even the entire 30 years then it can make sense.

My point is if you see these types of absurd rates from a loan officer right away then he or she is simply not looking our for your best interests. It's our job to give you options and look at everything not push a particular loan upon you. Now we do have more experience of course doing this as we do it every day and know as best we can the massive amount of changes that still seem to be popping up every day.

It's harder than ever to get a loan these days and more time consuming for both you and for me not to mention more expensive. Always keep in mind how much you will save versus the time period you need to recapture the outlay in funds. Each situation is totally different so talk to someone that has your best interest at heart and follows most if not all of these steps. 15 and 20 year loans should be considered and numbers run. With and without points also. Again if these loan officers aren't looking how to save you money on every single aspect of your loan, strongly consider shopping around until you find one that does. Make sure you get referrals also from his or her past clients. Most good lender have their referrals posted online.

I really hope this help clear up the mystery of the best way to get a good low rate but one that makes sense for you and is tailored to your personal situation, not a one aize fits all computer generated auto quote such as is done on Zillow by so many lenders. Talk to me and a few other local lenders and make sure you are comparing apples to apples.