Many lenders will use sleight of hand or tricky marketing to get people in the door. Once you’re in, their goal is to make that loan seem as attractive as possible so that you’ll sign on the dotted line as soon as possible.
Sometimes lenders underestimate certain fees that they are not responsible for. A great example is property taxes or homeowners insurance. These lenders know they won’t be the ones to set these fees, so they lowball them. The only reason for this is to trick the buyer into thinking their payments will be lower than they actually will be. The unfortunate result is that people find out on closing day that their fees are much higher than they expected. It’s too late in the process to go back.
Low Interest Rates with Hidden Fees
Some lenders advertise really low rates, but when you look at the fine print you see they’re charging you thousands of dollars to obtain that low rate.
Advertized Low Rates that Change Later
Ads in newspapers and periodicals typically have really low rates, but the lenders know that by the time the publication comes out, they won’t have to honor those rates. Why? Because rates change daily, sometimes even hourly, depending on the market. You can’t trust a rate you see in print or on a website.
“No” Closing Costs Bundled into the Interest Rate
Some lenders offer no closing costs or fees. But there’s no such thing as no closing costs. Are they working for free? Nope. These fees are bundled into your interest rate. You’re going to be paying for them somewhere!
How to avoid these tricks and gimmicks? Make sure you’re using a lender that you can talk to and ask questions of. Make sure they have a great reputation locally. Sit down with them and have them go through the loan program slowly and carefully. You want to understand all of the fees. You want to know if the long-term costs are going to outweigh the short-term benefits.
If you have questions about lenders, tricky marketing ploys, the mortgage process, or anything to do with home financing, we’re here to help. You can call 205–986–4220, connect with us on social media, or ping our website. We are happy to answer your questions.
— Ben Chenault,
Certified Mortgage Planner
MortgageBanc / Fairway Nmls# 2289
Copyright©2019 Fairway Independent Mortgage Corporation doing business as MortgageBanc. NMLS#2289.4750 S. Biltmore Lane, Madison, WI 53718, 1–866–912–4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License No 41DBO-78367. Licensed by the Department of Business Oversight under the California Finance Lenders Law, NMLS #2289. Loans made or arranged pursuant to a California Residential Mortgage Lending Act License. Georgia Residential Mortgage Licensee #21158. Licensed Nevada Mortgage Lender.