There are two primarily deceptive tactics used by lenders to rip off borrowers.
One…is for the lender to advertise or “low ball” their interest rates …hoping you’ll impulsively begin a loan application.
The second tactic is to “bait and switch” closing costs ….specifically by jacking up the points and fees.
Every day…local news stories features real life homeowners…who are losing their home to foreclosure.
These people weren’t stupid or greedy....they were just bait and switched...into these sub prime loans…at the very last minute...just as escrow was due to close.
For many buyers…their only choices were to either take the last minute…bait and switch (Sub Prime loan)…or cancel the deal...and risk losing their $10,000 deposit on the home …. lenders are masters at knowing exactly how to exploit vulnerable or ill pre-pared buyers.
Here are some simple rules to avoid being a victim
First : Ask your Realtor for referrals. Both you and your agent are a source of future business. The loan rep has every incentive to make the loan process go as smoothly and as fairly as possible.
Getting the best rate and terms is only possible…if you are dealing with a company that values your future business...and your future referrals.
Otherwise...you are just a short term profit center waiting to be exploited …. but don’t take my word for it …. just ask you friends and family about how they’ve been treated in the past by their lenders.
Second: When you do begin shopping for a loan…remember you are also conducting an interview .… an interview to evaluate the each individual loan reps competency and experience level.
“Truth be told” …most so called “loan reps”...are simply customer service employees.
They can be located anywhere, in or out of the country…with zero knowledge of the local market…or any background whatsoever in finance.
These reps are commonly known as “phone jockeys”. Their goal in this transaction ….is to simply gain profit...by charging you as many fees as they can get away with …..….and then go on to the next call.
So listen carefully for the loan reps reaction …. to your questioning.
If you getting a disdainful or “can’t be bothered” attitude now…. Just imagine what kind of treatment you’ll get after you‘ve committed paying $400 for the appraisal and credit report.
Once you have a feel...for who you prefer…meet with them...in person at your home.
Give them the chance to shake your hand look you in the eye and ask you for your business. I know its sounds old school, but you need to know who you are doing business with.
Also…require the rep to bring you a copy of the entire loan application you are about to sign when they arrive...(you should always retain a copy of what you are about to sign).
Next …Never allow a lender to pull your credit report as a pre-condition for issuing you a good faith estimate and interest rate quote….its simply not necessary.
Demanding to access your credit report…. is simply just a tactic to get control of your confidential information. The more often you grant access to your credit file, the greater your risk for Identity theft.
