Tricks and Traps in the Mortgage Process

The mortgage meltdown of 2008 brought with it a notable change in the industry:  a decreased number of mortgage brokers and loan officers.  From what I have seen, this decreased seems to have had a cleansing effect on the industry from the rampant predatory lending so prevalent in those circles in which I transacted often.

Still, there are unscrupulous providers employing the age-old trick and traps of their trade—costing consumers billions of dollars enabled simply by the lack of education on the part of consumers.

Before you consider applying for a new mortgage or refinance, give our staff a call before paying your loan origination fee, and we will analyze that mortgage  (free of charge or obligation), and provide you with our assessment.  At minimum, if you do not feel comfortable giving us a call, consider the following three tips to avoid being scammed throughout the mortgage process:

1)      Interest Rate Lock-In Provision:  The mortgage-interest lock-in disputes are one of the most common complaints lodged with Attorneys General across the U.S.   Lenders prefer verbally confirming that your interest rate has been “locked-in”, allowing them the ability to lock in the rate later if the difference inures to their benefit.  If the rate swings to the benefit of the consumer and too detrimental to lender, they “bank on” the consumer overlooking the rigged rate; and, when the angry consumer questions the increased rate, the loan officer simply states, “You never told me to lock it in.” It is his word against yours, with no documentation to prove it.  ALWAYS get your lock-in rate in writing.

2)      Buying Discount Points:  Buying Discount Points is one of the least understood concepts in mortgage interest and constitutes a substantive portion of lender income.  Very rarely will you ever want to purchase discount points.  Don’t let yourself be convinced by the interest rate figure, but instead by the difference between the two payment amounts with and without the discount points.  Divide the cost of the point(s) by the difference in the payment amounts to determine how long it will take to 1) make your money back for buying down the points , and 2) what it will do for you in the long run (i.e. Is the payment really that much lower?) Moreover, when employing the AMP, we seldom if ever recommend buying discount points.

3)      Fees and Closing Costs:  Question every fee that you don’t understand, and don’t be afraid to walk away from the closing table if you don’t like what you see or feel.  By this point, the lender has invested ample time and money into the mortgage process and documentation preparations, so they have much to lose if you walk.  You may lose any fees you have paid, but filing your complaint with your state’s department of commerce will force the lender to correct any misrepresentation.

Call us toll free.  We neither write nor refer mortgages: We only analyze and recommend mortgage types.

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