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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. You should never be made to feel panicked or pressured about making this size of a financial decision.
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 Rates change daily, sometimes hourly, so just by virtue of being in print somewhere, they are almost sure to be outdated!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:
"Hello, I'm calling about the 5% rate I saw that you advertised in Sunday's newspaper?"
"Well, it's wonderful that you called! Rates did change a bit this morning, and are now at 5.50%, but let's talk a little more about you..."
Sound familiar? It's the old bait-and switch tactic!
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. Are you really willing to take this risk? If it's sounds too good to be true then it probably is!
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