I often hear “my bank will give me the best rate because I’ve banked with them all of my life and they value my business.” Sad to say... That is false.
The truth is, your bank will offer you a higher rate because they know you want to keep all of your finances in one place. So, because all your banking is at one institution, it is highly likely you will seek a mortgage from them. Banks will optimize on this opportunity and rather than offering you the best mortgage rate they instead try to get away with offering you a higher rate. They only offer the discounted rate if they get into a competitive situation where the customer has done some shopping around. Once people begin to shop, they quickly realize that non-bank lenders have better rates and terms. Your bank will l still try to tell you that you don't qualify for their best rate for one reason or another.
Big banks don't need to offer the best rates because they spend a lot of money advertising to get your business and loyalty. Banks are in the business of making money, don't the mistake of thinking they are your friend.
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