Do mortgage companies usually mislead people in an attempt to abtain business?

Question

I recently applied for a mortgage, and after settling on a company and beggining the mortgage process, I received the paperwork in the mail for signature and all of a sudden, the deal changed. I am a first time home buyer, and was told I make an easy taget. Is this true, and how can I get through this process without getting ripped off?

Answer 1

We had the same problem when we purchased our first home nearly two years ago. Everything changed constantly, the biggest change was on the final papers that we signed, the numbers looked nothing like anything that we had seen before. Please take a look at this site and take the test to see if they are upholding your rights as a buyer. Unfortunately I found the site after we closed and it was too late.
http://www.stopmortgagefraud.com/signs.htm

Answer 2

I am a Branch manager for a mortgage and loan company and I can say that ALL companies work differently. Some, as stated above, do not put out all the information to the buyer and mislead them. I always suggest to a home buyers is to shop around. If you shop around for a car..why wouldnt you shop around for what will be the biggest investment of your lifetime? Most companies have the same programs, what they differ in are the fees. This will drive up the interest rate and your closing cost and at the end make any first time buyer feel "ripped off".

If you feel you are being mislead, get a copy of your credit report and go to someone else. Have them give you an estimate base on your credit score and financial scenerio. This is how I like to work here and it has been proven successful for us.

Good luck!

Answer 3

Direct lenders are easier to deal with sometimes but you have limited options of loans since you are only working with one bank. Mortgage brokers can give you way more options but you can run into some unscrupulous people.

If you haven't already entered escrow on the home you are purchasing, shop around. Talk to Realtors in your area and find out which lenders they prefer to work with. We know which ones can do the most for their clients. It's illegal for Realtors to get a kickback for referring to a lender so don't worry about a shady agent trying to make extra money off scamming you. Sometimes it's worth paying an extra point for a better lender that can get you a deal with a bank, saving you money in the long run. Remember that you always get what you pay for, so if you have a low fees lender, you'll have a low service lender.

Also, make sure your lender knows your goals for the short and long term. You want your loan to work for you now but also in the future. Example, it's foolish to get a 30 year fixed loan if you only plan to be in a particular home for 5 years or less because you won't pay the principle down very much at all. An interest only loan will save you a ton of money, allow you to maybe upgrade the property and when you sell in 5 years, you will gain way more equity by doing upgrades, than you will have paid in principle on a 30 year note.

Answer 4

There are a lot of factors that can change the deal. The first set of papers u sign r the preliminary papers. The rate is what they are working to get u, but it is not the actual rate. The lender decides the rate they will do the loan at. Also, the price may change to accommodate the realtors, closing cost, and broker fees involved. Ask questions for anything u don't understand and call other mortgage co. to verify accuracy. Research and Investigate but as everything there r no guarantees.
Good Luck!

Answer 5

This is a common occurence. Mortgage brokers will tell you a low rate and low fees to get you as a customer. and then after you have gone through the application process they will tell you that they can no longer get that rate or that your situation didn't qualify or what have you. Oftentimes it's too late for you to meet the terms of your sales contract and start over with a new mortgage provider so you're stuck. Lose your deal and possibly your deposit or stay with the unfavorable mortgage terms.

The only solution to this that I have found is to use reputable sources for your mortgage. Indymac bank is an online bank that has always given me good rates. You should also try countrywide, washington mutual, emigrant/immigrant. Basically avoid anyone that seems untrustworthy. It's too big of a risk.

Answer 6

Yes and No.

There are many lenders that will say anything to get your business and THEN they begin assessing the file and find out the true rate and terms available. This is very common but you can set yourself up to negotiate these types into a corner if you know what you are doing.

On the other side, an application and approval are only as valid as the information you provide. Garbage in = Garbage out . I teach loan officers and coach borrowers on structuring the file for success right from the beginning so that there are no surprises and you as a borrower save money.

I suggest learning about the process so that you know what to negotiate for. Here is some info that will help.

Answer 7

Every mortgage company puts ads in the paper advertising a 4% interest rate on a 30 year fixed mortgage. This is a teaser rate designed to drum up interest. The rate exists, but there are circumstances around it that don't happen very often. If you sign an application that includes the rate on it, I know in my case it represents a pre-qualification that they ran with their lenders. Additionally, any loan application should have with it a Good Faith Estimate that shows what you're being charged in closing costs and prepaids. This Good Faith Estimate is just that: an estimate. It will be close to what actual closing costs will be, within certain tolerances. And depending on what state you're in, you should have laws in place that will keep you from getting ripped off with excessive closing costs.

Answer 8

I am in escrow and work constantly with Mortgage Brokers. Sometimes they are shady and other times they promise one thing and cannont get a lender that can work with what they promised you. Your credit score could change or the lender they find that could meet the deal they promised you requires different conditions (Salary, Amount of Time at a Job, Etc..) So you should go through a direct lender NOT a broker. Ask parents, friends, co-workers who they used and that should help you weed out the dirty lenders/brokers from the clean.

Answer 9

There are some companies out there that pull the old, "Bait and switch." These are generally larger companies with a bit to spend on advertisement. Smaller companies without much advertising dollars depend on word of mouth and repeat business, so we care a deal more than our larger competitors. To avoid this kind of situation, I suggest going with a smaller broker or several different lenders, to see who can get you the best rate.

If you are going through a broker, the first set of documents you get are not legally binding for you, but are necessary for a broker to act on your behalf to the lenders.

If you have more questions or concerns, or would like a quote from a small but dedicated office like ours, send me an email, or check out our website.

[e-mail]

Aapexfund.com

Answer 10

That is why you need to read the paperwork. Perhaps you income, credit or some other variable had an adverse affect on the loan they originally quoted, and never updated you. This is why the GFE and TIL are required by law within 3 days of application. To everyone out there: read the paperwork!