Lies Mortgage Shoppers Hear
Lies do not have to be outright lies. Lies can also be deceptive practices or bending the truth. So while some mortgage brokers or loan officers outright lie to customers, more than likely it is crafty truth bending more often than not. Here are the top five lies that consumers hear when they are shopping for a home mortgage:
1. “Your rate is locked.”
You cannot just take someone’s word for the fact that your rate is locked. Usually you have to sign a rate-lock agreement and the majority of lenders require an up-front payment to lock-in your interest rate.
2. “This loan doesn’t have a prepayment penalty.”
This may be an irrelevant statement unless you sell the property or refinance the mortgage. It is usually discovered at the closing table during a sale or refinance that indeed the loan did have a prepayment penalty. It is very important to read the Truth-In-Lending statement that the lender gives you when you originally apply for the loan. This will tell you whether you have a prepayment penalty.
3. “The only way that you will qualify is with an adjustable rate mortgage.”
If a loan officer is trying to steer you toward a particular mortgage, it may be because they make a higher commission for selling you on that particular mortgage.
4. “There will be no cost to you because this is a no-cost loan.”
Nothing in life is free and neither is a so-called no-cost mortgage. One way or another you are paying fees. The costs are usually added to the balance of your loan (sometimes referred to as rolling-in the costs) or they affect your interest rate, making it higher. So while cash may not literally change hands between you and the lender, in the end you are the one that is paying.
5. “You’re not paying my broker’s fee, the lender is.”
Refer back to number four on this list. Whether it is in the form of a higher interest rate or higher closing costs, you as the borrower are compensating the lender for “covering” the mortgage broker fee. A good way to test this out is to ask the broker if you have the option of paying his fee in return for a lower interest rate.
What you need to do is weed through what the loan officer or mortgage broker is telling you in order to get to the truth. Read all of your documents very carefully in order to verify that the things they are telling you are true. The only person who is looking out for your best interest is you.
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