Not another mortgage offer!  Watch out for the ‘ol bait & switch

Each time I open my mailbox I have another mortgage refinance offer. Sometimes as many as five in a day! When I check my e-mail, it’s more of the same. I’m startled online by giant refinance snakes. Falling mortgage rate rain pours across my screen. About every fifth ad on the radio is for some mortgage deal.

Maybe it’s because I’m in the industry and I tend to notice mortgage ads more than the average person. Have you ever bought a car and suddenly you see the same model on the road a lot more? There were just as many the week before you bought your car, the difference is your awareness of them.

And, so it is with mortgage loans for me. I see so many ads touting incredible offers. But because of my knowledge with mortgage programs and guidelines, I can see through the deception being used on the part of many advertisers. Here’s the biggest things to watch for:

Bait and switch. This much over-used tactic is a ploy to get the advertiser’s phones to ring. They ‘bait’ you with a great sounding rate or ridiculously low payment. But somewhere along the path, the rate or terms change, and you don’t end up with what you inquired about. The worst cases are those where the borrower is at the closing before the “switch’ disclosed.

Deceptive packaging. How many times have you opened a piece of mail because you thought it was from your existing lender, or was some official or government business? Then you found it was a way of getting you to open the envelope to read their offer. You can’t help but feeling they are trying to insult your intelligence. If someone is so deceptive in their solicitation of business, you can only assume they’ll be deceptive throughout the transaction.

The devil in the details - Read and understand the fine print. A little word here or there can have a huge meaning. Watch out for what is NOT being said in an ad. Many times the details and fine print are omitted altogether. For example, ad offering unbelievably low rates have terms that that are far too risky for the average homeowner. They will have terms like: Negative amortization (which means that over time the loan balance increases instead of getting paid off) Adjustment periods and caps that can make the loan unmanageable after a few short months or years.

So how do you keep from getting burned?

• Determine your needs first. After clarifying your long and short term goals, you can narrow down your product search from the huge array of loan products available. With the help of your mortgage advisor/loan officer you can determine the loan that best meets your needs.
• 
  Work with someone you trust. Use a mortgage advisor  that comes highly recommended from someone you trust. Ideally, from someone who has had terrific first-hand experiences with the person. Remember – It’s not just a reputable company, but a reputable individual who will have a big impact on getting you the smartest loan for your situation.
• Ask questions. Understand the details! Feel free to ask questions to fully understand the loan you are obtaining.
• Always read the loan documents before the loan funds. You should be provided time to read and understand the loan documents before the loan funds and closes. Review the documents and clarify anything that concerns you. Confirm the funding date with the closing agent to ensure you have ample time to have any questions answered. You are legally bound to the documents you have signed once the loan funded and the documents are recorded.

It is true that the lending industry currently offers a lot of unique loan products. However, if it sounds too good to be true, it’s probably not true.

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