CHM Blog

Who is paying for those commercials?

February 9th, 2016 2:50 PM by Richard Sardella MLO.100007700/NMLS 233568

As a consumer, I have personally noticed mortgage lending commercials blowing up in all media since the end of the year.  Reasons can be attributed to the "expectation" of higher interest rates in 2016.  Lower loan volume will cause lenders to spend more money for their percentage of market share.  However, interest rates have actually Lowered in 2016 and lender's have changed their goals to capitalize on volume while lower interest rates are available.

As Colorado Home Mortgages has always offered free, no-obligation pre-approvals, credit scores and secured digital delivery of information, I was curious of who is paying for these commercials and spokesmen?

In a 30 year fixed rate comparison February 9th, 2016, I proposed a Colorado owner-occupied home purchase of $350,000 using 20% down payment, $280,000 loan amount with 740+ credit scores.  Here is what I found:

The company advertising Low, Low Mortgage Rates, which are unavailable without completing a lengthy online application (including your social security number) or waiting for them to contact you back from what information you did provide, sent an email including the following:

a.       3.50%  30 year fixed with P&I Payments of $1257 -  1 point

b.      3.625% 30 year fixed with P&I Payments of $ 1277  Zero points

c.       3.75%  30 year fixed with P&I Payments of $1297  Zero points and $1400 credit

d.      3.875% 30 year fixed with P&I Payments of $1317  Zero points and $2800 credit

 

Simultaneously, Colorado Home Mortgages publically posted the following at www.CoMtgs.com/RateSheet:

30 Year Fixed Conforming

Rate

Points

APR

Lock Days

3.375%

1.000%

3.528%

45

3.500%

0.000%

3.572%

45

3.625%

-0.750%

3.636%

45

3.750%

-1.500%

3.700%

45

3.875%

-2.000%

3.784%

45

4.000%

-2.500%

3.868%

45

The APR is calculated using a loan amount of $280,000 and these typical fees.

 

Of course interest rates are subject to change without notice and may not be applicable for all borrowers and/or scenarios, but the short comparison answer is:

On a $280,000 loan amount, it appears the Low, Low Mortgage Rate company would charge $2,800.00 in additional closing costs/points for the same interest rate, or offer an interest rate at least .125% higher.

Posted in:General
Posted by Richard Sardella MLO.100007700/NMLS 233568 on February 9th, 2016 2:50 PM

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