Refinancing With The Biggest Liar by Dan Harris
If I've heard it once I've repeated it a million times: "if you shop for mortgage on the phone, odds are you'll end up doing business with the biggest liar"... Don't let it happen to you.
Applying for a mortgage can be a frustrating and confusing experience. You are getting ready to take on or restructure the largest debt of your life. Be cautious this decision could make or break your financial future. You'll be challenged with tons of paperwork, and a barrage of new terms like, rates, fees, GFE, ARM, fixed, and hundreds more. Add to this the information overload from having to insure that you make the right decisions regarding homeowners insurance, title insurance, home inspectors, appraisers, attorneys and more, and it's easy to see how people who are refinancing or buying a home can get the feeling that they are on a run away train.
Avoid believing the biggest liar
Ok so you've been told your getting a rate that makes you the envy of your network of friends, associates and relatives. You've bought it hook line & sinker, further proof that there's a sucker born every minute. I wish I had a dollar for every time I've heard someone tell me about a rate they were getting, that I knew didn't exist for them.
Many loan officers or mortgage consultants prey on the ignorance of the consumer. With this in mind always remember the age old rule of "caveat emptor" (let the buyer beware).
If it sounds too good to be true; it probably is so question the heck out of it to get to the bottom line - The Truth!
When shopping for a mortgage, make sure your broker is completely forthcoming and honest with you. If you don't trust your broker, head for the hills. I'm not kidding, literally head for the hills, clear your head and start over with someone who will be truthful and honest with you.
Get it in writing
Over the years I have had many clients receive a GFE from another mortgage broker with information that conflicted with what they were told verbally. Misunderstandings can be avoided by following this rule. Make absolutely sure you get everything in writing when it comes to your mortgage.
Recently I was comparing 2 different loan offers from competing brokers, with an attorney and his client. While we were going over the numbers the client kept telling us that one of the brokers' had been telling her they were going to get some of the fees that were on the GFE waived. The problem was that although he had been telling the client for over 2 weeks that he would get certain fees waived, he had presented her this very day with a GFE with those same fees still present. She was insistent that he was going to waive those fees. You see, she had already decided to do business with "The Biggest Liar". Nothing any rational outside party could tell her would dissuade her. We were dumfounded by her belief that the broker would eliminate fees she had right in front of her in writing.
Two weeks later we were looking at the lenders loan commitment from the same broker and low and behold the fees that were going to be waived were now on the loan commitment. In other words, the verbal promises she was given were not kept.
ALWAYS MAKE ABSOLUTELY SURE YOU GET IT IN WRITING
There are many ways for a broker to skin a cat, (or you) if you are not educated. Mortgages & Rates come in all shapes and sizes; Fixed, Adjustable, Variable, Introductory, Balloon, Interest Only, Less Than Interest Only, Option Payments, Deferred Interest, Negative Amortization, 30 year, 40 year, 5/1, 7/1, 10/1 Arms and much, much more. To complicate matters even further you can hear clever brokers refer to an adjustable rate mortgage that resets in 3 years as a "3 year fixed rate mortgage". If your broker does this, call them on it and make sure he or she knows they won't get another chance to "baffle you with bullcrap".
There's a reason why when "your bank said no they said yes;" it's called a higher rate for a higher risk. It's really quite simple; interest rates are based on risk to the lender, the higher the risk, the higher the rate. If your credit score is 640 or below there is a high risk associated with making a loan to you. If your score is between 640 and 700 you are an average risk. If your credit score is above 720 there is a low risk associated with making a loan to you.
Honesty is the best policy
When dealing with a mortgage broker be certain you are talking with someone who is more interested in telling you the truth, than telling you what you want to hear. That bears repeating; don't make your broker tell you what you want to hear, make them tell you the truth. Understand why you are getting the rate that you are; this is important. Not everyone is going to get that advertised "best case scenario" rate you see on the pop-ups on your computer or late night television.
The other side of the coin requires that you must be absolutely honest with them. Doing things like hiding problems, lying about your finances, not giving the whole picture and more can drastically affect the information given to you by your broker. When the truth finally emerges it almost always change the rate and program you are eligible for.
Just make sure you and your broker are completely honest and work together to get you the best rate available for specific situation.