A couple of weeks later, I found the house that I wanted and went to the bank headquarters to get started on finalizing the deal. The bank VP brought me papers that showed an interest rate that was 1% higher than the rate for which I had been pre approved, less than two weeks before.
When I pointed this out, he gave me a line about how mortgage rates fluctuate daily. I responded that I had been checking mortgage rates on bankrate every day for months and no one else's rates had increased by 1% in the last two weeks. Me paying that higher rate was simply not going to happen.
He thought I was bluffing and said "This comes out to only about $40 per month on your payment, are you really willing to not buy the house over $40?". I did the math in my head, roughly $500 per year, $5000 per decade, $15000 over 30 years. I told him "I'm buying the house. The real question is if you're willing to miss out on hundreds of thousands of dollars in interest over $40 per month?". He said that there was nothing he could do. I gathered up my documents, closed my briefcase, got up and walked out of his office.
I contacted a mortgage broker and got a new pre approval from another lender. I ended up getting a rate that was right between my original pre approved rate and the rate that S&T Bank tried to get me to take.
I think that a lot of people get overwhelmed by the jargon. Rate, points, APR, APY, closing costs, PMI, overpayment penalties and everything else that goes along with it and just want the whole process to be over. I think that a lot of people just sign the papers to be done with the process because they don't want to deal with the process anymore.
Get past the jargon and industry terms and the math isn't difficult. Additionally, it's worth it to know the numbers and what implications are attached.