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Originally published Saturday, December 13, 2008 at 12:00 AM

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New online mortgage simulator offers buyers more accurate estimates

The new service, which costs $10 for a month, uses credit-score data from TransUnion credit bureau to deliver estimates of interest rates a borrower might qualify for.

New York Times News Service

Mortgage shoppers may often feel at a distinct bargaining disadvantage because they are not privy to the same information about interest rates as loan officers and brokers.

A new service, on TrueCredit.com, aims to help tilt the balance in favor of borrowers — and perhaps save them from an unnecessary round of inquiries to mortgage brokers in the first place.

The service, called the Mortgage Simulator, takes advantage of data from TrueCredit's parent company, TransUnion, one of the major credit bureaus, to deliver estimates of interest rates a borrower might qualify for.

Other online mortgage estimators cannot go this far, mostly because the typical consumer does not know his or her credit score, which is a critical factor in determining the mortgage rate.

TrueCredit's simulator (go to www.truecredit.com and click on "Mortgage Simulator") costs $10 to use for a month and can return valuable loan information quickly.

Users type in their preferred loan size and down payment, Social Security number, the address of the property and their monthly debts and annual income. The service retrieves the consumer's credit score and, a moment later, displays rates for a range of mortgage products.

Along with the results, borrowers are offered a "what if" tool, which enables them to play with different variables — for instance, the down payment amount or the credit score — to see how such adjustments might change the interest rate.

During a recent trial, for instance, this tool suggested a user would qualify for a 6.49 percent rate on a 30-year fixed-rate loan for $210,000. Changing the loan amount to $260,000 increased the interest rate to 6.52 percent, and the monthly payment by $334.

These are not actual loan offers, but rather estimates based on what banks nationwide are charging similar borrowers. That data, which is produced by the Heitman Group, a mortgage-consulting business in Eugene, Ore., does not yet take into account regional differences, so borrowers in different states may pay more or less than the rate quoted on TrueCredit.com.

Because figure is a national average, TrueCredit.com does not specify the lowest rates available on the market. Given that lenders can sometimes offer rates a percentage point or more below the national average on a particular day, users of the Mortgage Simulator should be prepared to seek even lower rates if they go ahead with their mortgage plans.

Brad Strothkamp, an analyst with Forrester Research, based in Cambridge, Mass., called the mortgage simulator a useful service.

"What I like most about it is its independent, unbiased nature," he said.

Other online services may offer mortgage rates, Strothkamp added, but they also accept advertisements from lenders, thereby making that information appear less trustworthy.

Copyright © 2008 The Seattle Times Company

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