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Lenders discount mortgage rates in public then hike in secret

And that’s where the non-banks get a bit sneaky. Unless they hike their headline look-how-cheap-we-are –rates, the moves will fly under the radar of the rate comparison houses.

As Peter Marshall, product data and compliance manage at Mozo, says: “It’s a pretty common practice and it’s really hard for us to have visibility of because we only get told what they want the public to know.”

But there’s also some legitimacy to it. “Non-bank lenders obtain a bucket of funds at a particular price and everyone within that bucket has to move with it. They have to go to the market to get new funding and the price could have changed,” Marshall says.

For this reason, discount lenders will often have multiple tranches of existing customers on different rates – the interest changes with reference to whatever the seductive starting point.

But be aware that big lenders will too … their advertised rate is nothing more than a starting point for negotiation. In a nutshell, banks give secret discounts to new customers and then hike in plain sight; non-banks fully disclose what you’ll pay at first and then any hikes are hidden.

Mortgage rates today, August 27, 2018, plus lock recommendations

Financial data affecting today’s mortgage rates

Today’s data are mostly unfavorable for current mortgage rates — the more important factors are all pointing upward.

Major stock indexes  up (bad for mortgage rates) Gold prices  are up $1 to $1,214 an ounce. (That is slightly good news for mortgage rates. In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower) Oil prices  remained at $69 a barrel (neutral for today’s mortgage rates, because energy prices play a large role in creating inflation) The yield on ten-year Treasuries  increased by 2 basis points (2/100ths of 1 percent) to 2.84 percent. That is bad for borrowers because mortgage rates tend to follow Treasuries CNNMoney’s Fear & Greed Index  this morning rose another 6 points

How are mortgage discount points calculated?

I know they are based on 1% of the loan. However, are the calculated on the base loan or with the closing costs rolled in? For example, your base loan is $320,000 with closing costs of $3,000 that you are rolling into the loan.

If you are using $320,000 toward the home, and rolling $3000 worth of closing costs into the loan, then your loan is $323,000.

All of these calculations are based on the loan value, which is $323,000.