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When the lowest mortgage rate really isn’t the best deal

You have undoubtedly heard that comparing interest rates, and different loan quotes, really is one of the best ways to save on your loan. This holds true for all types of mortgage financing. Whether you are buying a home, taking some cash out of your equity, or even refinancing to lower your payment or rate, or possibly even both.

Quite frankly that’s what we really feel defines us here at Compare Free Mortgage Rates. The ability to receive free no obligation low rate mortgage quotes from lenders and loan specialists so that you can save the most money on your mortgage financing.

But when is the lowest rate not always the best deal?…

Often advertised on television, radio, print, are unbelievably low “Teaser Rates”. These teaser rates are rates that are advertised to entice you into calling the company, only to find out, like 90% of other borrowers, that you do not qualify for that specific rate or term. These teaser rates are often followed by lines and lines of very small print that outline just how difficult it actually is to receive that rate and term. More and more regulation is being brought forth to combat this type of bait and switch tactic, but it is still one of the most often used forms of enticement marketing by the mortgage industry.

Typically if you are able to qualify for these rates they are followed with several points of what is known as “buy down”, not counting any points your lender or broker may charge you for their services or “origination”. You are quite literally “buying down” the rate, most of the time at a huge cost that you may never recover. With the average homeowner in the US only staying in their homes for five years, they never fully realize the savings of of buying down their rate. Some of these buy downs could extend as much as ten years out to full recoop the savings on your mortgage payments. That’s IF you qualify for the mortgage in the first place. Typically these loans are three to five year adjustable rates with three year prepay penalties. So you will never recover your cost, but the brokers in question will be making a very pretty penny.

That’s why we have made it a firm commitment to never advertise teaser rates or work with lenders that use teaser rates to entice quotes through our quote system. We believe in offering a real service to the visitors of our site, for free, and will continue to work to make sure that we offer the best and most complete mortgage quote system online today.