For some strange reason, bragging about a mortgage rate takes on such status as how far one can hit a baseball, or how big the fish was. Maybe it tells everyone "look how savvy I am at picking out the lowest interest rate!" or "yeah, I thought about locking but I knew rates were on their way down so I waited." I've been at dinner tables and heard people, one by one, go around bragging about their rate. It's really weird. Did these people know something others didn't? Of course not. Most likely they were lucky. Or maybe, in fact they did do a few things that, while not guaranteeing them the lowest market rate, certainly helped their chances.

The first thing in locking in the best interest rate is to not fog everything up comparing everything under the planet from the number of days to the Summer Solstice to the Construction Spending numbers released later this month. The biggest culprit in rate confusion? Comparing different loan programs.

Comparing rates from one lender to another is tough enough, at best. But trying to compare rates on multiple loans, from multiple lenders, makes it even tougher. Face it, no matter what anyone tells you, identical loan programs from different lenders are tied to the very same index. What makes one lender different from another? If it comes to comparing the very same loan program, then there really is no difference, as long as you get the loan you wanted at the right price and at the right time. Lender A looks like Lender B when you go to the Settlement Table.

Before I get jumped on by account execs from different loan companies telling me about their great customer service, their Six Sigma program or maybe their Customer for Life attitude, I didn't say there's no difference between loan officers. There are maybe more differences in loan officers than there are stars in the sky, but their responsibility to you stops or starts, based upon how successful a career in mortgage lending they want to have. But again, that's where you can be led astray. This column is about finding the best interest rate.

You have to decide, without a doubt, which loan program is right for you. Period. Don't go backwards and second-guess yourself. Decide and move forward. It's perfectly advisable to have at least one or two Loan Officer Superstars offering advise as to which programs would work best, given your goals, but the very first key in getting the best rate is deciding on a program and sticking with it. One can never, ever, compare apples and oranges in the mortgage business. We have more apples, oranges, pears, peaches, kumquats, and grapes than you can imagine. And we do it on purpose.

For instance, you call lender A and ask them for their quote on a 20-yr fixed rate mortgage and they offer 5.75 percent. Let's say you then call Lender B and Lender B knows they're slightly out of the market. So they'll reply, "My 20-yr fixed rate mortgage today is at 5.875 percent, but let me ask you a question, how long are you going to stay in your home? Is this your first house? Will you live there for 20-years? Have you thought about a 5/1 ARM? Have I told you about our brand new Payment Option Plan?"

If the loan officer is worth his or her salt, they'll have talked you into comparing other loan programs, hopefully finding one with a better rate. With Lender B's help, did you decide on a 10/1 Interest Only Loan with the rate being much lower than the 20-year fixed? Bingo. Lender B wins. And you didn't call Lender A back.

You broke the first rule of finding the best rate. Instead of "hunting," you went "fishing." Don't let loan companies talk you into other programs after you've made up your mind. Sometimes it's nearly impossible to get an apples-to-apples quote in the mortgage business. And it's tough enough to nail the lowest rate as it is. Don't muddy the waters with multiple choices. Stick to your game.

Next week: Part II - Economic Reports and Your Rate

Published: April 15, 2005

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.