The headline rate is not the full story
A rate shown online may assume a specific credit profile, loan size, occupancy type, property type, equity position and discount points. The footnote can matter as much as the number.
Example
An advertised 5.99% rate may include $6,000 in points. A 6.25% quote with no points could be better for a homeowner who might move or refinance again before the break-even point.
Why homeowners get pulled in
Rates are easy to compare. Points, credits, closing costs and break-even are harder. The easiest number to compare is not always the most important one.
What to ask
- What is the rate with zero points?
- What assumptions are used for that rate?
- What are the total closing costs?
- Are lender credits included?
- What is the break-even period?
Bottom line
Use online rates as a starting point, not a decision. A real refinance decision needs the full quote.
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Do not compare the rate by itself
A refinance quote is a package. The rate matters, but so do points, lender credits, closing costs, appraisal assumptions, lock timing, and how long the homeowner expects to keep the loan.
A quote with a lower rate can be more expensive if the cost to get that rate takes too long to recover.
Quote questions worth asking every time
- What is the rate with zero points?
- Are lender credits included?
- What are the total closing costs?
- Which costs could still change?
- How long is the break-even period?
- What happens if I sell, move, or refinance again?
The practical test
A good quote should get clearer when you ask questions. If the quote becomes harder to understand, or if the conversation shifts back to the headline rate every time you ask about cost, slow down and compare the structure more carefully.