Don’t Be Mislead

Well, you may be thinking - "hey, I'm a smart enough person - how on earth could I be fooled? And who would want to trick me?"

Excellent questions - here are some answers.

Buying a home or refinancing is one of the largest financial decisions you will make in your life - and unfortunately, this means you may experience some stress as you approach these decisions. As in many other industries, the mortgage industry has more than its share of unethical individuals that are out to make a buck, but do not have your best interest at heart -- these people may try to take advantage of your stress at this point in your life. For example, I have heard numerous stories about people being called and told that they need to "quickly come into the office and get all the paperwork signed, rates are changing". Not true - you should never be made to feel panicked or pressured about making this size of a financial decision. If you are truly ready, with Hallmark, a rate can be locked right over the phone.

Online lending is also particularly scary - ANYONE can throw up a mortgage website, and be aware that the person behind that great rate you are seeing online might be some guy working out of his basement in Florida who has been in the business for 6 months. For example, closing costs vary significantly state to state - out of state lenders frequently misquote fees, as they are not aware of local and state requirements. I have personally been involved, though our Mortgage Trauma Center, in bailing out several individuals who were lured in by an offer that seemed too good to be true, but then the lender could not come through at the closing. Click here to read some of their testimonials. I have been in mortgage banking since 2002, and I would not trust my own loan to an online, unknown lender. Are you really willing to take this risk?


Advertisements in the newspaper or online are also rampant with misinformation, designed only to get phones ringing. Rates change daily, sometimes hourly, so just by virtue of being in print somewhere, they are almost sure to be outdated. I ran some newspaper ads back in 2002 when I first started in the business - I had to submit my ad with rates 2 weeks before the print date - those rates were NEVER right once the newspaper was printed. The trick is, lenders can put anything out there, and if it gets the phone to ring, that is all they need. The following conversation ensues….."Hello, I'm calling about the 5% rate I saw that you advertised in Saturday's newspaper?" "Well, it's wonderful that you called! Rates did change a bit this morning, and are now at 5.375%, but let's talk a little more about you……"

Lenders will also frequently promote "free appraisals" or "discounted origination fees". This is great, but BE AWARE that if you are not paying for it one place, you are paying for it somewhere else. Interest rates and closing costs go hand in hand, so it is important to look at the overall loan package, not just one individual item that seems discounted. We all work off the same financial markets with essentially the same profit margins. Do we make money when we do your loan? Certainly, just like you get paid for working at your job. What we seek for you is the best balance between a great interest rate and reasonable closing costs. For example, a low or no closing cost loan, or a free appraisal, usually comes at the expense of a slightly higher interest rate. This creates more revenue for a loan officer, who can then credit back the extra dollars to pay for some/all the costs.


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