bankrate = bait & switch

bankrate = bait & switch

Posted in the Bankrate Forum


Clinton, MA

#1 Aug 16, 2006

What really offers: offers a service to potential home loan and mortgage borrowers free of charge where you can enter your state, city and loan scenario to find out interest rates. After you enter in this information, you will be brought to a screen where dozens of mortgage broker shops display their prevailing interest rates. These mortgage brokers pay a substantial amount of money to have their information listed in order to get leads (or potential borrowers). Occasionally, you will see a stray bank or two listed among the brokers.

If you ever have tried this service, you will see that the majority of mortgage brokers offer a rate that is often times ULTRA LOW compared to the bank rates. Have you ever wondered why? It is called "Bait and Switch". Today I noticed that a mortgage broker on listed their rates at 5.375% for a 30 yr fixed with no points or origination fees (the average rate without points is 6.25% today). I went directly to their website and yes, they are advertising that rate there as well. Let me be the first to tell you that this is an outright deception. I have access to the same rates as these mortgage professionals and unless you are paying 4-5% in points, you are not getting this rate..... period.

Why do they do this?
If I am offering a realistic interest rate at 6.25% and they are quoting a rate a 5.375%, who would you apply with? The person offering the lower rate. It's okay, admit it. No one is judging you. If I didn't know any better, I would definitely look into it. The sad thing is that after several weeks of processing, paying their application fee, and an appraisal fee, if they came back and said your loan was approved for a rate of 6.375%, would you take it? Now keep in mind that your closing is in 5 days, you have forked over $600+ for the appraisal and application fee, and you are closing on the sale of your old home in 3 days and the new buyers are moving in next week. Would you take the loan? You bet you would. Don't shake your head no. You would take it. Oh by the way, you have to pay a 1% origination fee now..... did they forget to mention that to you?

It is services and mortgage swindlers like these that make my it hard for people to trust the real professionals. Folks, be careful of services and brokers that offer the "too good to be true" rates. They are too good to be true and sooner or later, you are going to pay for that decision. Be very careful to request and meticulously review a good faith estimate PRIOR to paying any application or appraisal fees.

Clinton, MA

#2 Nov 10, 2006



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