In every community and region there are dozens upon dozens of lender players and brokers who can offer mortgages. However, at the national level the spectrum of lenders gets smaller quickly because many companies don’t have the required licensing to lend across multiple statelines. As a result, many national lenders don’t feel as pressured by competition to offer competitive rates versus each other for mortgage lending.
The above said, Discover Bank has now decided to rock the market boat a bit offering a far more competitive rate in March than some of its competitors. Discover’s mortgage rate for a 30-year fixed home loan is set 3.35 percent, including a 40-day lock-in window for rate protection. This offer is far lower than the same mortgage rate average with all the banks combined, currently between 3.65 percent and 3.75 percent. When a single 0.1 percent in mortgage interest can cost hundreds of dollars a year, Discover’s offer is definitely worth considering.
The above said, not everyone will be able to participate in Discover’s offer. Applicants with a credit score of anything less than 740 are going to be denied the above offer. Further, borrowers that are approved have to put serious cash down to be eligible. Discover is requiring a 20 percent down payment to make sure the applicant has a significant stake in the house and isn’t just borrowing for a quick sale and flip.
Those who apply with less than the above criteria and have a credit score above 680 will instead find the best opportunity is different loan from Quicken. They will be required to place a 10 percent down payment at least and the interest rate involved will be much higher, comparable to the national average at 3.76 percent. The loan does come with a good lock-in period of 45 days to protect the rate involved, but the borrower is still going to pay a lot more than the same loan offered by Discover above.
Again, loan differences involved often have to do with the quality of potential borrower as an applicant and his credit history. Those with stellar marks get the best loans, while those with average credit scores end up having to pay more for the same mortgage amounts.