Our team at Blink has been in the industry for decades, and we know that buying and financing a home can be tricky. There’s all kinds of varying information online, and you’re not sure what to believe or what it all means.
That’s why our Blink team has started compiling some of our most Frequently Asked Questions (FAQ) to share them on the blog. If you’re the reading kind, keep reading. If you still have questions and would prefer to talk in person or via email, we are more than happy to help that way too.
Q: Our bank promised a $750 lender credit if we use them. Can you match it?
A: Yes, Blink can match it, but you really need to analyze every aspect of the loan, typically cost and interest rate are linked together so when cost increases, interest rates decrease and vice versa. Before you analyze your deal based on one factor, read below to learn the relationship between cost and rate.
Spoiler Alert: That same $750 credit will cost you a lot more in the long run as you will be paying a higher interest rate than you could have gotten by not receiving the $750 credit.
Remember sea-saws on the playground when you were a kid? That’s similar to the way interest rates and credits (or fees) work, meaning as one side goes up, the other goes down. So as your rate increases (or your brother goes higher on the sea-saw), your fees decrease (you being on the downslope of the sea-saw) and as your fees increase your rate decreases. There unfortunately is no such thing as a free lunch when it comes to lenders.
Now insert the big government banks (the chains you see around town and when you travel) and their tendency of relying on existing customer relationships. That creates the perfect storm for borderline deceit.
And here’s why: Your bank knows you feel comfortable with them and since all your money is already at one place, and easy to manage on one app, it would make life easier, right? You would think, but that is definitely not always the case. Now, insert “the credit.”
Close with us and we will give you a $750 credit is what they’ll tell you, but the question you want to ask yourself is, could I get more benefit by lowering the rate instead of getting a credit? No matter what answer you give or get from the lender, the analysis needs to be done on the credit vs. rate and which will benefit your personal situation.
So what gives? They (big government banks) know that you are less likely to shop them for a better rate if you are getting something from them and in turn the sea-saw moves. Your fees go down via a “credit” and consequently your interest rates increase above what it could be if you were to not receive the $750 credit.
So what does this all really mean? The $750 credit will cost you waymore in the long run as you will be paying a higher interest rate than you could have gotten by not receiving the $750 credit. Overtime that higher interest rate will be more than the original $750 credit you received as a beginning incentive, and you’ll end up spending more. At Blink, we don’t want you to spend more. We want to be transparent with our pricing and our strategy.
As the old saying goes, no such thing as a free lunch and because of this, I highly recommend you compare your big government bank lending options to those of an Independent Mortgage Company, like Blink.
Big Government Banks = Retail Interest Rates, Retail Closing Costs and Retail Closing Process.
Independent Mortgage Company = Wholesale Interest Rates, No Junk Fees and a much faster Closing Process (like one that’s done in a blink!).
If you’re in need of a Pre-Approval Letter, you can get it instantly. At Blink, we offer hundreds of mortgage products under one roof for easy transactions each and every time. Call or email us for more information.
