Find five different online mortgage lenders such as http://www.lendingtree.com/.
From these five lenders, find the following mortgage rates: 10 year (if available), 15 year (if available) and 30 year.
Convert these rates into Effective Annual Rates (EAR’s).
Discuss which rate is actually the cheapest rate.
•Present the rates in a table. List the quoted rate and EAR rate, the lender and the time to maturity.
•What are three common mistakes most homebuyers make when looking at quoted mortgage rates?
•Based solely on the EAR, which rate is the cheapest? Does this make sense? Explain your answer.
•Keeping the time value of money in mind, if an investor chose the 30 year mortgage, what does that say about their opinion of the time value of money?
•Why do the different lenders have different rates?
•Is the difference in rates going to have a material impact on the cost to the home buyer? Explain your answer.