May 1, 2006
10 Things Your Lender Won't Tell You
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"This isn't the RIGHT LOAN for you."
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"A slightly HIGHER RATE for you means a big check for me."
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"Don't count on your RATE LOCK when rates are rising."
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"Our APR doesn't mean what you think it does."
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"We never met a FEE we didn't like."
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"We're in cahoots with your real estate BROKER."
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"Once you buy mortgage insurance, good luck CANCELING it."
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"You should worry about OUR FINANCES, too."
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"You're 'PREQUALIFIED'? Don't bank on it."
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"What happened to your PREPAYMENTS? Can't be sure."
Let's look at the 1st of these 10 in this post, and we'll cover the others in subsequent posts this week….
1. "This Isn't the Right Loan for You."
You've found your dream house and now all you need is a loan. Hold everything, even if you've been through this drill before. When interest rates are rising and lenders' business is slowing down, they often get desperate. The result: You may be pitched a loan that's totally inappropriate for your needs. "A loan is a product, and just as in any business where you make money by selling a product, [loan officers] overreach in their sales pitches," says Michael McCann, a California attorney specializing in banking law.
One mistake common to many borrowers is taking a one-year adjustable-rate mortgage because of the "sucker rate," an artificially low rate that hops up quickly in the second year, says North Carolina mortgage broker Christopher Cruise. "All they want is to get into the home." If you know you are going to be in your house for more than just two or three years,
"Many borrowers take a one-year adjustable-rate mortgage because of the 'sucker rate'."
You ought to consider getting a delayed adjustable or two-step mortgage, which adjusts to a fixed rate after a set period. You'll pay a higher rate at first but won't get that immediate "bounce" that comes with most one-year ARMs.
Next Time… a look at #2…
Filed under Mortgage Info, Most Recent Post by Buyer's Broker
