Do Banks Offer the Best Mortgage Terms
It used to be that retail banks were pretty much the sole source of getting a home loan. In fact, several years ago they were the only source. But over time, mortgage bankers began to form and today are a major player in the mortgage marketplace. Banks provide multiple financial services from checking and savings accounts to credit cards to automobile loans and of course, home loans. Can consumers expect a better deal at their bank instead of contacting a mortgage company? Banks seem to tell you so, but that’s not necessarily going to be the case.
Think about the last time you walked into your branch and spoke with the teller. Or, recall when you had a question about one of your bank accounts and you called customer service. After your questions were answered, were you offered other services? Did the customer service representative ask if you’d like to apply for a credit card today? When you got more monthly bank statement was there a flyer that promoted a certificate of deposit? Bank employees typically get a small bonus or referral fee if they send a customer to a different department and the customer opens up a new account or accepts a credit card offer. And they can ask if you’d like to refinance your mortgage or inquire whether or not you’re in the market for a new home and maybe you’d like to get a rate quote for a new mortgage.
At first, it might seem that if someone has multiple banking accounts then the bank will give them a more favorable rate than if they went directly to a mortgage company that only offers one product: home loans. But that’s not the case. Remember, both banks and mortgage lenders price their mortgage loans using the very same set of indices. When a bank sets its mortgage rates for the day the bank uses the same index as a mortgage company. Banks don’t have the corner on interest rates.
In fact, it may very well be just the opposite. When banks have customers that have say an automobile loan, a credit card and a savings account, they have a captive client. There’s no reason for a bank to get hypercompetitive with an interest rate because, well, they really don’t have to. They’re a loyal bank customer and if they’re happy with their bank why lower interest rates when the bank doesn’t have to?
It’s fairly easy to validate this. Go ahead and log onto your bank’s website and look at mortgage rates. Check out a standard 30 year fixed conforming rate with no points. Then, contact us to get a quote on the very same loan type. We can almost bet we’re not only going to have a better rate but a much more competitive one as well. We have to earn your business based upon competitive loan programs and superior customer service. Banks do not.