Does Internet Lead Generation Promote Competition?

When the borrowers submit their loan information online the most important are the initial price quotes provided from the website to make an intelligent decision. Price lock is another very important aspect. This is when the lenders lock the interest rate and price quote for 30 days. It’s beneficial only if the interest rates go up during the 30 days and gives the borrower an edge to take advantage of the lower “locked” interest rate. If the mortgage rates go down during the 30 days the borrower can simply get that interest rate instead of the locked rate. To make their decision borrowers find out current information on mortgage refinance rates and compare mortgage rate quotes to lock in the lowest interest rate.

Fixed-Rate Mortgages oo FRMs are dependant from 3 factors:

• Mortgage Interest Rate
• Points (upfront charges as a percent of the loan, usually paid to the Mortgage Broker)
• Lender fees (fees ranges depending on the lender. Many lenders today because of the recession charge $0 lender fees.

Adjustable rate mortgages or ARMs have more factors to determine mortgage cost:

• The interest rate index used by the ARM
• The interest rate margin that is added to the index in resetting the rate on the adjustment date
• Any caps on the size of rate changes, and the maximum rate.

All this information can be obtained from the Lead Generation Website or directly from the loan officer. Borrowers that have an ARM loan that already past the first rate adjustment date need this information. Most people don’t realize the importance of the first rate adjustment date. The results could be dealing with twice as much monthly mortgage bill.

Mortgage brokers and lenders that quote prices on internet lead generation websites are not bound by the quoted price. Mortgage rates change every morning and sometimes during the day. Mortgage rates quotes supplied by mortgage brokers and lenders apply only to the day they are posted. This is why i strongly suggest doing a price lock to insure you can get that mortgage rate during a 30 day period.

Some mortgage brokers take advantage of borrowers who decide, before and after the lock on the loan, they want a different type of loan. If the borrower locks on a 30 year FRM at 5.12% but then they decide to switch to a 5/1 ARM when the mortgage rate is 4.02%. The borrower is already committed so the lender locks the 5/1  ARM at 4.35%.

Sharp lenders also add padding on their loan fees, especially if they didn’t include any fees in the initial price quote to the borrower. Fee padding can carry on right through closing since the locks only apply to rates and points. The mortgage broker adds extra fees because the borrower cannot get the locked rate with any other lender since in the meantime the rates went up.

In sum Internet Lead Generation sites provide some competitive mortgage rates and prices for the borrowers but at the end it all depends on the borrower’s ability to know which lender has the best rates and doesn’t pad the lender fees.