When you’re thinking of purchasing a home, refinancing, or getting a reverse mortgage, you naturally want the interest rate and terms that will be most beneficial to you. In other words, you want to pay the least for the most benefits.
The rip-off artists in the mortgage industry know that, and they’re counting on your trusting nature to keep you from looking too closely at their “money saving” offerings.
Emails, letters, and full-page ads scream promises that sound good, but may not, in fact, be truthful.
Here are a few terms that should cause you take a much closer look before being drawn in:
Low Fixed Rates
All mortgage lenders do offer low fixed rates today, simply because rates are low right now. However, you may see ads touting rates that are ½% or even a full percentage lower than other lenders are offering. Right now rates are right around 3.875% for a 30-year mortgage. Ads promising a 3% fixed rate are actually offering an Adjustable Rate Mortgage which could go to 5% or even higher within just a few months.
How do they get away with it? By using fine print to disclose that the rate is only fixed for a specific number of months. They’re counting on the fact that the print is not only lengthy; it’s so fine that reading it requires use of a magnifying glass. Most people simply won’t try. They’ll just “trust” that the large print is true and they’re getting a 30-year fixed rate.
Here’s a phrase designed to lull you into a false sense of security when contemplating a reverse mortgage. Sure they’re government backed, but only because nearly all mortgages are held by Freddie Mac or Fannie Mae.
When the phrase is used by elected officials such as former Senator Fred Thompson, it adds yet another level of security.
Meanwhile, unsuspecting consumers believe that they are buying into a government program that will protect them and their interests. In truth, the fine print might reveal terms that are extremely harmful. Sometimes even the true interest rate and actual cost of the loan is buried in fine print.
This is another promise associated with reverse mortgages, and believing it can lead to foreclosure. They make it sound as if the homeowner will never have to pay property taxes again. In most instances, that is the opposite of the truth.
In most reverse mortgages, the homeowner must promise to pay both property taxes and homeowner’s insurance premiums on time. Failure to do so can lead to foreclosure – which might be exactly what a dishonest lender had in mind.
Read the Fine Print
This one is despicably sneaky. They know that if you did read the fine print, you’d turn down the loan. They’re counting on their invitation to read it to reassure you – so that you will, in fact, not read it.
The Federal Trade Commission and the states of Washington and Colorado are going after lenders who use deceptive advertising, but they aren’t finding all of them, and unscrupulous lenders continue the practice.
- See “too good to be true” ads as a red flag that something is not as stated.
- Do read the fine print. Get a magnifying glass and go over it line-by-line.
- Don’t be pushed – Do your best to get a copy of your final agreement a day or two before closing so you have time to read and digest. Don’t let a lender rush you through reading 8 or 10 pages at the closing table.
- If in doubt, take the document to an attorney to read.
Call on the Mike Clover Group
The Mike Clover Group at Homewood Mortgage has been helping Texas homeowners and home buyers since 2002. We offer the lowest (honest) interest rates and closing costs available in the industry, and we promise timely closings.
Our reputation is based on customer satisfaction that leads to both repeat business and referrals.
You can reach us at 469.621.8484 or you can apply on line at www.mikeclover.com.
18170 Dallas Parkway
Dallas, TX 75287