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First Time Home Buyer/Shopper

Spent about 30 minutes on the phone with Quicken Loans (Rocket Mortgage). I provided all of the expected information when running a credit check and painting a financial picture.

After the person over the phone let me know that I was preapproved for the loan amount requested, I asked what the interest rates were on the loan. They said that I would have to first lock in on a home before those details would be provided.

Is this accurate? How can I compare loan rates between competitors if I have to first go so far as to lock in on a home?

  • 5
    You can get a feel of this lender vs. others by looking at their published rates (while keeping in mind that to get these rates you need to have great credit score and meet other criteria). – xiaomy Jan 4 '18 at 21:51
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    I have heard a lot of negative things about Quicken loans, you may want to do your own research. If it were me I would use their preapproval to shop, but someone else when it comes time to actually get the mortgage. – Pete B. Jan 5 '18 at 11:47
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    Since Quicken Loans probably processes countless applicants, they have become more aware of only providing information on an as-needed basis. I can only imagine the countless complaints of "You guys said xyz% and now I am buying my home and it's qrs%, you cheats!" They would rather not provide any figures until you have actually acquired a home buying contract. It's possible you just need to re-phrase your question to "With my financial history and today's market, what is the interest rate range which I can expect? I understand that this answer will vary base on the future market." – MonkeyZeus Jan 5 '18 at 15:11
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    In the book Short Changed, the author went to a used car lot, kicked tires, etc. The salesman told him you can drive off with this for X a week. When he asked what the interest on it was, he said "I don't know who you are, but you're not here to buy a car. None of my customers ask for interest rates. I'd like you to leave." (Side note, excellent book!!) – corsiKa Jan 5 '18 at 16:35
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    @MonkeyZeus: that's not much of an excuse for QL, they may be issueing a lot of loans, but so does Wells Fargo and US Bank and they're both up front with everyone about their rates. – whatsisname Jan 6 '18 at 5:24
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If you are truly preapproved (not just prequalified) then they are required to supply you with a Good Faith Estimate within 3 days. The interest rate will appear on that document. It's subject to change until you lock it in, but there's no reason they can't provide an estimate now.

Source: Title 12 of the US Code of Federal Regulations

Except as otherwise provided in paragraphs (a), (b), or (h) of this section, not later than 3 business days after a lender receives an application, or information sufficient to complete an application, the lender must provide the applicant with a GFE. In the case of dealer loans, the lender must either provide the GFE or ensure that the dealer provides the GFE.

Again, that's based on actually applying for the loan, and not just prequalification. I don't think you can apply for a loan purely over the phone, since you'd have to sign some documents.

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    The fact that they're reluctant to do that suggests to me it's likely to be a terrible rate. – Kevin Jan 4 '18 at 21:20
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    @xiaomy That's why I said "if" OP is preapproved. If they are just prequalified (which, if it was all done over the phone, maybe they are) then no GFE would be issued. – stannius Jan 4 '18 at 21:45
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    @8protons I think what Kevin meant is that the lender probably has terrible rates for everyone, regardless of their credit score. And by terrible he means non-competitive. And by non-competitive I mean higher than the competition, such that anyone diligently shopping around would never choose them. – stannius Jan 4 '18 at 22:02
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    @stannius That was my experience with that particular lender - their approval process was very simple but their rates were not competitive. Plus they called me every other day to see if I was ready to "lock in my low rate" – D Stanley Jan 4 '18 at 22:19
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    @TomW If OP is in the US, then Title 12 of the Code of Federal Regulations says so: Except as otherwise provided in paragraphs (a), (b), or (h) of this section, not later than 3 business days after a lender receives an application, or information sufficient to complete an application, the lender must provide the applicant with a GFE. In the case of dealer loans, the lender must either provide the GFE or ensure that the dealer provides the GFE. That's based on actually applying for the loan, though, and not prequalification. – Engineer Toast Jan 5 '18 at 13:22
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This is definitely strange. I've had a number of occasions where I've contacted a bank and asked what their interest rates were on one type of loan or another, and they've always been very willing to tell me -- always with caveats that those are today's rates and they can change by the time I actually get approved, may depend on age of the car or whatever relevant information about the thing I want to borrow money to buy, credit score, etc, but if I give them enough information they'll tell me a rate. Many banks publish their rates on line.

As Kevin said in his comment, if a lender is unwilling to tell you their rates -- or in general if a business is unwilling to tell you their prices -- this usually means "higher than the competition" or they'd be quite anxious to tell you. When a salesman encourages you to buy his product but refuses to answer questions about it, that's rarely because he just loves the happy look on the customer's face when he gives them the pleasant surprise after they're committed.

  • This is true. Only difference is in cases where rates are dependent on credit score or previous history but even then an established range can be given upfront. – Jonast92 Jun 6 '18 at 10:58
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    @Jonast92 Exactly. If I ask for a rate and the bank says, "That depends on your credit score", and then asks for my credit score or gives me a range, fine. But if they say, "That depends on a lot of factors. We can't say until after you've paid the loan application fee", forget it, I'm going to another bank. – Jay Jun 6 '18 at 14:15
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I personally would consider Quicken Loans to be a reputable mortgage lender. They may not be the cheapest, but in my experience they are competitive and their customer support is very good. The most likely reason for them not being able to provide a rate is that it is somewhat dependent on the property you choose.

Your statement is a little confusing here:

They said that I would have to first lock in on a home before those details would be provided.

The word "lock" is typically used to "lock in a rate" but you don't "lock in a home". I think all they're saying is they need to enter in an address into their system before it will spit out a rate. You can probably enter in any address for one of the homes you're considering to get a ballpark rate.

Once you get a rate and you are strongly considering purchasing a particular home, then you can "lock your rate" for that home. All "locking the rate" means is that if mortgage rates change in the next X days (typically 30-40 days), you are guaranteed the rate you locked (whether rates go up or down). Note this doesn't marry you to that particular lender. If you shop around after locking a rate you can still use a different lender, though if you do that I'd highly recommend asking your lender if they can match the competing offer first, since maybe they can and you already have a relationship with them.

As a side note, I once received a quote from Quicken Loans that was decent, and I think I even locked in the rate. I then got another quote from a friend of mine who is a mortgage broker which was significantly better. (He was doing me favor and foregoing his commission.) I then presented his offer to my Quicken Loans rep and they were nice enough to tell me that it was a fantastic deal and that I should take it. Even though I didn't end up financing with Quicken Loans, I found my experience with them to be very good, as well as efficient.

1

Banks normally should be able to tell you what their rates are today, but they are completely correct that you normally can't actually lock in those rates until you're actually under contract to purchase a home. stannius' answer is correct if you actually are approved for the loan, but it sounds like you're actually just prequalified, since you're not actually under contract on a specific property yet.

While a lender who prequalifies you should be able to tell you at least approximately what rate you'd be able to get today for a loan of a given amount and duration, you won't normally be able to lock in a rate until you're actually under contract and have actually applied for the specific loan.

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Go to bankrate.com and click on Mortgages, then Mortgage Loans, and the situation you want.

The current rates (based on a very good credit score) will come up and the lenders who are providing them, along with the points, etc each is asking for. A point means an extra 1% on the rate basically.... Also this website has tutorials for buying your first house, refinancing, etc.....

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    This will help 8protons understand the process and find out what the interest rates are prior to and during the application and approval process. To a large degree, the lender was correct in that you can't know exactly what your rate is until it's locked in as it is based on your credit worthiness. – Debbie Hall Jan 8 '18 at 18:02

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