Protect yourself ! Get 2 things in
writing from the loan broker / lender
1. The interest rate locked through the expected closing date
2. That any increase in total lender fees will be paid by the loan broker
There is only one reason the loan broker wouldn't put it in writing; they
don't plan on honoring the quote they gave you.
Don't be fooled by come-ons or misrepresentation from other lenders/loan
Well, you may be thinking - hey, I'm a smart enough person - how on earth
could I be fooled? And who would want to fool 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, and
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, a rate can be locked right over the phone.
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outdated. 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
.."Hello, I'm calling about the 7% 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 7.5%, but let's talk a little more
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.
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
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.
I have been in mortgage banking for over ten years, and I would not trust
my own loan to an online, unknown lender. Are you really willing to take