Shopping for a mortgage online can feel overwhelming. So when you see a quick, clean list of rates on a comparison website, it’s tempting to move forward with a mortgage lender offering the “cheapest rate”. However, this can create issues for borrowers.
Online rate comparison websites might look helpful on the surface, but they rarely offer the actual rate/loan terms promised. They are often designed more for clicks than for clarity.
The Illusion of “Best Rates”
Most comparison sites show rates based on a best-case scenario based on the following loan qualifying criteria:
- Perfect credit score
- Large down payment
- Primary residence
- Detached single-family home
Unless a borrower checks each of these requirements, that spectacular interest rate most likely is not available to you. But that’s the point—it’s designed to get you to click on the link and inquire about the loan product offering.
The Hidden Truth
Here are some insights as to how these sites operate:
- Paid Listings: Many of these sites charge lenders to be featured, meaning only large banks or national brands with big budgets are included. Smaller, local lenders (who might offer better service or rates) aren’t even on the radar.
- Lagging or Inaccurate Data: Mortgage rates change constantly. What you see online may already be outdated by the time you view it.
- Missing the Fees: The rate shown might look great, but what about origination costs, discount points, or hidden fees? These often aren’t disclosed until much later or are hidden in the fine print.
- No Timeline Info: How fast can they close? Will they hit your deadlines? Most sites won’t say and probably can’t.
