SHOPPING FOR A HOME LOAN – The Good, the Bad, and the Ugly
Living in a world with so much technology at our fingertips has its advantages. It allows us to be more informed consumers and this can be greatly beneficial when shopping for goods and services. For most of us, the thought of one local place to buy groceries, books, or anything for that matter, is a thing of the past. Whether we are in the market for a car seat, a sliding glass door, or car insurance, we have virtually endless options. We have the ability to not only compare prices quickly and easily, but to compare quality of service as well.
The home mortgage loan is no exception. A person is able to search through a list of local lenders and can receive a number of estimates in a matter of a few hours. Even more important is the ability to read reviews from folks that have actually done business with a particular lender. If 30 people have taken the time to do an online review, chances are the lender knows what they are doing.
Each lender may have his or her own way of presenting loan scenarios and estimates to the client. More often than not, a client will be looking at 2 different types of documents and will have a hard time discerning which one is actually the better deal. Based on factors that vary from deal to deal, one lender may have a different view as to how to estimate closing costs. One may estimate it assuming title fee’s being split while others may estimate it with those fees being paid by the seller or with a lender credit. I’ve had many a client come to me more confused than when they started after looking at 2 or 3 loan estimates.
A loan estimate is purely an estimate. The numbers that appear on one lenders “Good Faith Estimate” are basically a breakdown of loan terms and costs inputted by that individual. Here is where it gets Ugly… Some lenders are so hard up for business that they just flat out lie. Sorry to have to put it so bluntly but I see it all the time. You give someone an honest, fair assessment of what a new mortgage will look like and they show you what Joe Blow had drawn up for them down the street. Joe Blow underestimates everything on his Fee Worksheet and even LEAVES OUT little things like the set up of escrow accounts in order to impress the client with his bargain mortgage. I won’t go into detail on how many ways I’ve seen deceptive estimates presented. All I will tell you is to make sure you are dealing with someone you like and trust. I’ve had clients tell me horror stories about the San Diego broker who sold them on his “great deal”… Then 3 weeks into the loan after the client had paid for appraisals and inspections, Mr. San Diego breaks the news that his company does charge a fee to process the loan. He then adds in that little $3,000 he left out to set up escrows and that little charge for something required, like title insurance.
To make a long story short, the Ugly part of loan shopping is that sometimes the best “salesman” gets the business instead of the client finding the best mortgage. A savvy borrower may be able to read between the lines and compare apples to apples on different options but I see far too many people being mislead with incorrect information with the intention of getting business.
Connecting people and homes, one loan at a time…
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