Jan272015

CFPB launches new mortgage interest rate checker

Consumer Financial Protection Bureau launched a controversial mortgage interest rate checker to protect customers from rate-gouging lenders.

The more information consumers have, the better decisions they make. When I launched the new system on this site that provides detailed cost of ownership information, I did that to provide consumers more information of higher quality than they can find elsewhere to help them make better housing decisions.mortgage-docs_free_money

One of the important decisions people have to make when house shopping is which lender to use for the transaction (assuming they aren’t paying cash). Many people don’t shop their lenders, and as a result, they end up paying higher interest rates or endure higher fees.

The much-maligned Consumer Financial Protection Bureau developed a new tool to help people compare the rate their lender quotes them with market rates for the area. This tool caused many lenders to complain, mostly because they wanted to continue gouging customers without their customer’s knowledge.

If you are shopping for a home loan, this tool is worth a look.enticed

Check interest rates for your situation

The CFPB is a federal government agency. We are providing this tool for free, with no profit motive, to help you make more informed mortgage decisions.

Our data is provided by real lenders and is updated every business day in the evening. The lenders in our data include a mix of large banks, regional banks, and credit unions.

The data is provided by Informa Research Services, Inc., Calabasas, CA. www.informars.com. Informa collects the data directly from lenders and every effort is made to collect the most accurate data possible, but they cannot guarantee the data’s accuracy.

(click below for a larger image)

Capture

  • Shop around.

    Get quotes from three or more lenders so you can see how they compare. Rates often change from when you first talk to a lender and when you submit your mortgage application, so don’t make a final decision before comparing official Good Faith Estimates.

  • Consider all your options.

    Make sure you’re getting the kind of loan that makes the most sense for you. If more than one kind of loan might make sense, ask lenders to give you quotes for each kind so you can compare. Once you’ve chosen a kind of loan, compare prices by getting quotes for the same kind of loan.reluctant-seller

  • Negotiate.

    Getting quotes from multiple lenders puts you in a better bargaining position. If you prefer one lender, but another lender offers you a better rate, show the first lender the lower quote and ask them if they can match it.

  • Check your credit report.

    If you haven’t checked your credit report recently, do so now. If you find errors, get them corrected before you apply for a mortgage.

Our data comes from actual lenders and is updated every day. Credit score, loan type, home price, and down payment amount all affect the interest rate you can get. Interest is only one of the many costs you will pay when getting a mortgage. While shopping, ask about points, mortgage insurance, and closing costs. Make a final decision only after comparing lenders’ Good Faith Estimates, which include all the costs.

The mortgage rate is one of the most important determinants of affordability and overall market prices, so it pays to take the time to shop the rate and get a better deal.

Impact of Mortgage Interest Rates

Remember, Dr. Housing Bubble’s real homes of genius. He found the most dilapidated crack houses in LA asking obscene prices as emotional evidence of a housing bubble back in 2006. It was a very powerful series. Many of the prices today give home shoppers the same negative emotional reaction.low_interest_rates

So what is different today?

Mortgage interest rates.

The prices of the housing bubble that were insanely stupid eight years ago are coming back. The only reason they don’t look as ridiculous today is not due to wage inflation, but entirely due to the difference in cost of ownership created by 4% interest rates rather than 6.5% rates. Since people know their wages haven’t gone up very much, they have the same reaction today that they had eight years ago.

If we had the same interest rates we had during the bubble, house prices today would be just as insane. A 40% drop in interest rates doesn’t have the same emotional impact as a raise at work because lower rates are intangible, but their effect is real.delay

Market Timing

It’s very difficult to time the housing market — which is one of the reasons I developed my monthly housing market reports — but irrespective of the changing winds of the market, the analysis of individual properties is constant: it’s either a good deal versus renting or it’s not.

What’s been lacking in the past is a good and reliable method for evaluation every property for sale in the market. For buyers to perform their own rent-versus-own analysis on every property they were interested in would take far too much time and effort. Having that data and analysis available to buyers was the main reason I commissioned the custom IDX system on this site.

I expanded on the rental parity concept to create detailed housing market reports, and develop the analysis of each for-sale property on the MLS found on this site. I want to bring the power of rental parity analysis to everyone and enable them to benefit financially from its power.

OCHN-rating-10The rating system on every property shown on this site — which includes the entire SoCal MLS, and very soon will include San Diego County — the rating system is now based solely on rental parity. Properties at or below rental parity are rated 7 or higher, and properties above rental parity are rated 6 or less.

I could have eliminated the rating system entirely and just used the valuation percentage also shown on each property, but this is less intuitive and harder to grasp. Remembering that negative numbers are good and positive numbers are bad confuses many people, and determining relative values is even more difficult. A scale of 1 to 10 is immediately understood by even first-time users, and it’s relationship to valuation and rental parity reinforces the power of the rental parity concept.


[dfads params=’groups=23&limit=1&orderby=random’]
[listing mls=”PW15013149″]