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With mortgage rates at 4-year highs, look for discounts

By Jeff Lazerson

3/4/18

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages at one point cost: A 15-year at 3.625 percent, a 30-year at 4.125 percent, a 15-year agency high-balance ($453,101 to $679,650) at 3.875 percent, a 30-year agency high-balance at 4.375 percent, a 15-year jumbo (over $679,650) at 4.25 percent and a 30-year jumbo at 4.375 percent.

What I think: Mortgage loan originators across the country are making the dreadful phone calls to their mortgage shopping clients that go something like this:

“Sorry that you still can’t find a home or get your offers accepted with this tighter than tight inventory situation. By the way, along with home prices continuing to climb, interest rates and payments are up substantially as well. Bite the bullet and take on a higher monthly payment or lower your expectations and buy a less expensive place.”

So, what can those dismayed home-buying mortgage shoppers do about this double whammy of bad news?

Learn about non-obvious mortgage pricing discount opportunities. There are plenty out there.

First and foremost, understand that lenders are sweating big time right now. Loan volume is way off. Trying to get ahead of the competition, many lenders have reacted to the sales slump by offering very sharp pencil pricing, working off lower profit margins.

Do you have money or does your family have money? Many lenders are offering rate discounts for moving money over.

For example, Bank of America offers “Preferred Rewards” and “Relationship Tiers” that can provide you with a discount on closing costs. Separately, you can get a one-quarter point reduced interest rate if you move more than $500,000 over to a Bank of America account, according to Bank of America executive David Doyle.

The grand prize discount that I found was at Citibank. Citi will give you one-quarter point off the interest rate if you move at least $200,000 over. A million dollars or more gets you three-eighths off. Best of all, it doesn’t have to be new money if you already have money parked at Citi, according to Citi spokesman Mark Rogers.

Chase Bank and Union Bank also offered rate discounts in exchange for moving money over.

These types of money mover over discounts are also available through mortgage brokers.

In addition, mortgage brokers may be able to offer as much as one-quarter point off in loan fees just for impounding property taxes and fire insurance.

One bank that caters to mortgage brokers is offering one-half point off the rate on home equity lines of credit for merely setting up an ACH transfer account.

Do detective work. One client of mine found what appeared to be better pricing on the lender’s retail website than what was offered on the mortgage broker channel. When asked, the lender came back and offered my client a tenth of a point discount to the fee.

More lenders seem less worried about getting busted for fair lending violations with the regime change at the Consumer Financial Protection Bureau. While lenders are supposed to price all borrowers equally and fairly, some lenders will price match or even beat the price if you show them the competitors Loan Estimate.

If you have questions or comments, please contact Jeff Lazerson by clicking here. For more great insight make sure to check out Jeff Lazerson’s Mortgage Grader Radio Show on Sundays at 10 am on AM830 KLAA.