You’ve seen them on the internet and in your mail box, the too good to be true mortgage offer. Here is the truth with regards to mortgage offers that seem too attractive…
Mortgage lenders are required to disclose interest rate and APR. Most typically have the fine print at the bottom of the offer in super tiny font that discloses the assumptions. The assumptions generally are loan size, credit score and loan type. For example a direct mail offer that says you can lower your mortgage payment $300 per month with an affordable low rate mortgage at 3 percent. Sounds enticing right? The reality of it is such an offer is only affordable and offered on adjustable rate mortgage, not a fixed.
Fixed rate mortgages are traditional loans with 30 year terms, 15 year and 10 year terms. If an offer says a fixed rate mortgage, it must truly be a fixed rate loan. The truth is if anything looks too good to be usually is. Be a smart consumer don’t be fooled by deceptive advertising by companies you’ve never heard of. Unfortunately, the Consumer Financial Protection Bureau only has so much bandwidth and has not gotten to all of the bad apples out there. Pick a lender that you trust and that provides total clarity in full disclosure.
Any lender that is not truthful about the type of product they are offering does not have your best interest in mind. The other unfortunate reality is that lenders are not obligated to have your best interest in mind. That onus is on you as an informed consumer. If you pick a lender who does have options and choices that you like, it’s in their best interest to keep you as a happy client which means being truthful and honest as the likelihood of repeat business is there if you have a good experience. Lenders that direct mail low rate enticements are focused on sales numbers. Pick a lender who you trust, and who is going to do what they say they’re going to do when they say they’re going to do it. Don’t let yourself fall prey to a ridiculous mortgage offer only to find later on down the line that you’re not going to be able to get the offer anyway or that you were being dealt an adjustable rate mortgage disguised as a fixed.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.