Around 2022, a woman I'll call Sandra came to me in full panic mode. She'd just been pre-approved for a $320,000 mortgage at 6.7% APR. The monthly payment was around $2,100. She thought she'd done well because her bank offered her a "loyalty discount."
She was about to sign.
I looked at her credit report. Her score was 761. She had a stable job as a nurse. Zero credit card debt. She'd been at the same hospital for nine years. I literally laughed out loud at the 6.7% offer.
"Sandra," I said, "you can do way better."
She didn't believe me. She thought all mortgage rates were basically the same. That's what the bank told her.
I made her try three other lenders before she could sign anything. A credit union offered 5.9% APR. An online mortgage broker came back at 6.1%. A small regional bank offered 6.0% with $2,000 in lender credits. The best offer: 5.8% APR from a credit union she'd never heard of, with no origination fee.
Let's do the math. On a $320,000 loan, the difference between 6.7% and 5.8% is around $200 per month. Over 30 years, that's around $72,000 in total interest difference. But Sandra didn't plan to stay in the house that long — maybe 10 years. So the actual savings were around $24,000 in interest plus around $2,000 in fees. Total saved: about $26,000.
She was literally shaking when I showed her the numbers. Not from anxiety. From anger. Her own bank — where she'd had accounts for 12 years — was trying to overcharge her by thousands.
But here's the part that really gets me: the first bank called Sandra the next day and offered to match the 5.8% rate. Just like that. They had room to move the whole time. They just waited until she had leverage.
Sandra ended up taking the credit union's offer anyway. She said she didn't trust the first bank anymore. I don't blame her.
This story is not unusual. I see it all the time. Banks offer higher rates to loyal customers because they assume you won't shop around. A 2024 study from the Consumer Financial Protection Bureau found that existing customers pay around 0.5% to 1.5% more on loans than new customers.
That's not a mistake. That's a business model.
Here's what I tell every client: get at least three quotes. Not one. Not two. Three. And don't tell them what the other offers are until you have all three in writing. Then play them against each other. It works more often than you'd think.
The Fed is supposed to meet around September. If they cut rates, you'll see lenders competing even harder. That's when you have the most leverage. But don't wait until then to start shopping. Start now. Get your quotes. Then wait for the Fed announcement. If rates drop, ask for new quotes. If they don't, you already have something to fall back on.
I will keep posting updates on this. Check back soon.
P.S. Sandra sends me a Christmas card every year. On the back she writes "6.7%" crossed out and "5.8%" circled. I keep them in a drawer. They remind me why I do this.
— J.W.