Good Reasons to Totally Ignore the Sunday Mortgage
I have to admit that I'm a weekend-loving person. I work
hard all week, and when the weekend comes, I like to kick back and
relax. Peek in my living room window on a Sunday morning and you're
likely to see my husband and me sitting on the couch, drinking
coffee and reading the Sunday Boston Globe.
This past Sunday was no exception, and my morning was going
until I turned to the back page of the Real Estate
"Can you believe this?!," I shrieked, at my husband, who was
engrossed in the sports section. "How can they have the nerve to
print this 'mortgage comparison chart' week after week, right there
next to the news, as if it actually contains useful, unbiased
I don't exactly remember what I said after that, but I do know
why I was so upset. Here you've got New England's largest, most
well-respected newspaper, feeding information to unsuspecting home
owners that is biased, out of date, incomplete and misleading,
and putting it out there as a way to supposedly help consumers
make educated decisions.
It doesn't make any sense. The fact is, I can think of at
least four good reasons why you should completely ignore the weekly
mortgage comparison chart in the Sunday paper when shopping for
- The Mortgage Chart Ignores Many Costs.
When you look at one of these charts, the first (and maybe
last) thing your eye goes to is the rate. We've all been trained
to believe that the lower the rate the lower the monthly payment
and it's nearly impossible to resist scanning the grid to see
who's offering the lowest number.
The problem though, is that the final cost of buying a
mortgage product includes a lot more than just that one
number. The price you'll pay for your mortgage will include
some or all of the following: attorney fees, credit reports, a
property appraisal, processing fees, and other hidden and not-
Different lenders charge different amounts for each of these,
and one way or another, all the people involved in the closing of
your mortgage need to get paid. When you focus on the rate, you're
only looking at a small part of the total picture.
- The Mortgage Chart Compares Apples and Oranges.
For example, some of the rates quoted include points (an up
front fee equal to 1% per point of the size of your loan)
and some don't. The more points you pay at closing, the lower your
mortgage rate will be, so comparing offers with different point
structures is confusing, if not downright irrelevant.
Or how about this? Some of the rates listed assume a lock
period of as few as 15 days, while others go out to as many as 60
days. The lock represents how long the bank will guarantee a given
rate for; an important number depending on when you expect to
close. In general, the longer the lock period, the higher the rate
(the higher rate is the bank's way of hedging its bets as it
promises you something further out into the future.). But it's the
same problem. If the lock period is different across the board,
what does a difference in rate really mean?
- The Mortgage Chart Doesn't Apply to You.
First, because the data is old by the time you see it. My
Sunday paper dated November 5th has a footnote that says, "Rates
as of 11-2-06." By Monday, when I call any of these folks, it's
already four days old. Has the rate changed? Who knows?!
Second, because as another footnote explains, "Rates based on
$175,000 loan for single family home with 20% down
" But what if
you need a $300k mortgage on a two family house with 35% down?
Again, there's no telling how this affects you.
My point is that by the time you call the lender, and depending
on your specific situation, the relevancy of the chart data may
have long flown out the window.
- The Mortgage Chart is a Paid Advertisement.
Yes, that's right, you're looking at an ad! As hard as this may
be to believe, and even though it's stuck in there amongst all the
news, the mortgage grid is a paid, product placement, provided
to the newspaper by a third party company whose clients pay to
The lenders listed are not independently chosen by the
newspaper editor or anyone else on the paper's staff, and the
rates quoted are self reported (all with no guarantee or
obligation of course, and subject to change without notice).
I know, it can be disheartening, and I don't want to make the
situation any more confusing. But I do want you to understand what
you're looking at. It's one more reason why just asking what the
rate is, even under the best of circumstances which this is not
leaves a lot to be desired.
Instead, what I recommend is that you choose a lender or mortgage
professional just as you would any other professional service
provider: Start by talking to friends and family. If they had
a good experience with a particular person or company, there's a
good chance you will too.
You already have enough anxiety when financing a home. Just as
you'd never pick a dentist randomly out of the phone book or even
worse, on the basis of a single, oversimplified statistic, such as
"number of wisdom teeth removed per year" please don't entrust
the financing of the single biggest asset you own to a poorly
compiled chart in the newspaper.
See you next month!
|Debbie on Fox25 News|
Thanks to Fox25 News for inviting me in to speak with Bianca de
la Garza on her business program last month.
I really enjoyed having the opportunity to discuss my favorite
topic helping consumers find the best mortgage for their
this link to watch!
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||November's Home Value Improver
With the leaves falling, now is the time to think about removing
debris from your gutters!
Whether you do it yourself, hire someone else, or install gutter
guards, don't overlook this important maintenance item.
Clogged gutters and downspouts can lead to water and ice damage,
and a few minutes each Fall can go a long way towards protecting
your home's value.