When it comes to mortgages, anything's negotiable
Julie Garton-Good, GRI, DREI

Q:I applied for a mortgage loan. The lender quoted me an okay rate, but with very high points. Needless to say, I shopped around (like you suggest) and found the same rate with almost no points.

When the first lender called to see if I was ready to go with the loan, I told him that the points were too high and that I had found lower ones. He said he could probably "do something about that" and later faxed me a loan disclosure sheet, showing that he had met the second lender's points.

I went with the second lender because I felt like I'd been taken advantage of by the first lender. Why do mortgage people do this? Don't they know how bad it looks for the industry?

A:You are correct. It does look bad for the industry. It also wastes the consumer's time as well as the lender's. While lenders are in the business of maximizing their profit, the mortgage industry (like other industries) has its share of "get all you can" lenders. That's where awareness comes in. You knew to shop for not only the interest rate, but the discount points (as well as hopefully other costs). As with any other major purchase, buyers need to know enough about the lending process to ask intelligent questions and not take the first reasonable interest rate they find.

But there are times when the lender may be giving you only a range of rates and discount points. For example, if you're merely discussing mortgage possibilities with a lender over the phone, a specific rate might not be quoted. Why? The lender needs more information before quoting an exact rate. He would check your credit, run your qualifying ratios (based on the income and debt information you give). The bottom line is that lower rates and lesser points generally go to stronger buyers. In fact, it's not uncommon for a lender to quote you the highest probable rate and points for the loan you're considering when doing a "Good Faith Estimate" for you. The idea is that although this is merely an estimate of costs, it will probably lean to the grimmest side of what you would pay. This might have been what happened in your situation since you don't mention the span of time between talking to the first and second lender, and/or whether the first lender sent you an initial "Good Faith Estimate" at the higher rate.

In lending (as in life), lenders who try to play the game of "get all the marbles you can" will probably not be in business long enough to count how few marbles they have accumulated. Just as you did, others will get wise and go down the street to the competition.