Understanding Mortgage Rate Shopping
Monitoring mortgage rate movement can be challenging—even for professionals. To make valid comparisons, rate shopping must be done on the same day, for the same loan program, under the same loan scenario. Otherwise, you may end up comparing apples to oranges.
Why rate quotes can differ
- Outdated information: Rates that are even a few hours old may no longer be accurate. Comparing rates across different days is especially unreliable.
- Different loan programs: A quote for Fannie Mae HomeReady® is not the same as a standard Conventional mortgage. Each program has its own eligibility and pricing.
- Discount points: A rate with discount points cannot be fairly compared to one without points.
- Loan Level Pricing Adjustments (LLPAs): Agencies such as Fannie Mae and Freddie Mac apply pricing adjustments based on credit score, loan-to-value, property type, and other factors. Two scenarios with different LLPAs will not yield the same rate.
Bottom line: For rate shopping to be meaningful, the comparison must be made on the same day, with the same loan program, and using equivalent loan scenarios across all lenders.
Key information lenders need for accurate quotes
- Your current FICO® score
- Your purchase price or loan amount range
- Your down payment (or desired loan-to-value ratio)
- Property type (Single-Family Home, Condominium, etc.)
- Occupancy type (Primary Residence, Second Home, or Investment Property)
Our approach at Pacific Coast Financial LLC
Many lenders may issue a pre-approval letter after gathering only basic details. At Pacific Coast Financial LLC, we go a step further. We request supporting documentation—such as income, assets, and credit verification—so we can run Automated Underwriting System (AUS) findings (Desktop Underwriter® / Loan Product Advisor®). This helps us deliver a more reliable pre-approval letter and a firmer rate quote.
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