Learning Center Article

Article: How to Pick the Wrong Lender

One day, you're interested in getting a loan. Your plan is simple: Call a number of lenders and see who has the lowest rate. You call the first lender. He asks you when you plan on getting your loan. You tell him in a couple of months. He gives you a low rate quote. And, after a number of calls, you find the first lender you called has the lowest rate. When the time comes, you know whom you'll use.

Now fast forward a few months. You call the first lender. His rate is a bit higher than the last time you spoke with him. He tells you that the rates have gone up a bit. He even invites you to check around. Why do that? After all, he had the lowest rate quote when you did your first rate search. You get your loan and all is well, right?

Wrong! This lender used a trick that has become a dark part of the mortgage business. You see, the first lender you called knew you wouldn't be getting your loan for a couple of months, so he quoted you a rate well below what is feasibly available to you. After you checked around, you discovered his quote was the best. Surprise! You KNOW he has the "lowest" rates because he had the "lowest" rate quote the last time you called him. This technique is actually taught by unscrupulous trainers and is, in my opinion, shameful!

Here's another trick:

You call a lender, get a rate quote, even meet with him and complete a loan application with the rate he quoted shown in your package. Time goes by, your loan process continues and you are now ready to sign loan documents. When you get to escrow, pen in hand, you discover your excellent rate is much higher than you were led to believe. The explanation: Your program got a little more expensive, the rates went up, or whatever. If you want the rate you were quoted, you will have to pay a couple of more discount points to get it. For those of you who do not know, one discount point equals 1 percent of the loan amount. Nice, eh?

There are so many scams a dishonest lender can pull on you; I would need a book to discuss them all! You definitely can be a sitting duck for a lender who has his technique down. But what do you do to protect yourself?

Easy! Don't just jump at the lowest rate quoted to you. Heck, anyone can quote a low rate! But if it's not possible, what good is the quote? More important than the rate, you need to know whom you are dealing with. Investigate the lender before using them. Get referrals from friends and relatives based on their actual use of the lender, not based on what they heard or the lender's polished ads.

Another great source (and my favorite, of course!) is your real estate agent. That is, if your agent is someone you can truly trust. Agents regularly work with lenders and these lenders know that if they don't perform, they had better never set foot in that agent's parking lot again, never mind their office. But make sure your agent actually has first-hand knowledge of the lender. Has he worked with him? How is he with clients? Is he honest and truthful...even if it's bad news? How timely is he? How are his costs? These are important things to know.

Also, be open to someone being honest with you. Don't go searching for the answer that makes you feel good. Sometimes, honesty hurts! If you look for that "good" answer, a less-than-honest lender will sense it and they've hooked you!

Remember, your real estate agent is not only working for your business, but also for your family's business, your friend's business, everything. He would definitely want to ensure you work with quality people who will take care of you as well as he would. I know that's my philosophy.

About the Author: Lawrence D. Elliott has been a Realtor® for over 16 years and provides professional representation for clients in Los Angeles, Orange, San Bernardino, and Riverside counties. He can be reached direct at 1-888-810-SOLD. He also runs a network of real estate web sites, which can be accessed through his main site at http://www.LawrenceElliott.com.

January Issue

Departments

»Home Buyer's Corner
»Seller's Know How
»Learning Center
»Quiz Zone
»Glossary

Services

Selling Your Home?
Let REALTORS® Compete For Your Business!

Search MLS Listings
Homes101™ has a real estate agent waiting to help you find a home right now!

Find a Contractor
America's Premier Contractor Referral Service.

For Sale By Owner
Buy and Sell Real Estate Without Paying a Broker!


Resources

Free Estimates
Free Estimates from Qualified and Pre-screen Contractors.

Find a Painting Contractor
Professional Painters Referrals are Always Free. home improvement projects easier

Refinance your Home
Refinance your home to consolidate debt regardless of credit history.

Order Boxes Online
Next Day Delivery for Most of the USA.


Try a Pop Quiz
Home Buying Core Knowledge
Property & Ownership
Know Your Condos
Selling and Listing
Contracts, Terms and Condtions
Leasing & Rentals 101
Estates & Property Laws
Real Estate Valuation
Real Estate Terminology
All About Financing

Your Home Buying, Selling, and Real Estate Resource

Home Buying Intelligence Magazine provides comprehensive real estate articles, mortgage guides, and real estate quizzes, for everything about home buying and selling. Our core goal is to provide factual information that will help our buyers and agents gain knowledge and make intelligent real estate investment decisions. We cover a very broad range of real estate, mortgage, equity loan, and insurance topics and provide varying subject depths for the home buying novice to seasoned agent.

Real Estate Quiz Zone

We have a Real Estate Quiz Zone to test your knowledge! Home buying and selling is a big deal financially, how well do you really understand it? Take a quiz and see how many questions you can answer correctly! To complete the quiz, click on the radio button of your choice for each of the questions. When you are finished, hit the "Check Answers" button at the bottom of each test page. Our quizzes cover everything about real estate: home appraisal, estates, property laws, mortgages, financing, agents, brokers, and more!

Real Estate Learning Center

Does the world of real estate terms, contracts, and mortgages seem like a big puzzle to you? It really can be quite intimidating. See our Real Estate Learning Center, where we provide comprehensive learning guides for everything about home buying and selling! From real estate investment, appraisal, insurance, and selecting the right real estate agent and listing broker. Make intelligent decisions on residential home mortgage, refinance, equity loan, home improvement, and house selling.

Our Service

This Service is designed to provide a community based forum for the open and free flowing exchange of home buying and real estate agent comments, opinions, experiences, and information. Although Home Buying Intelligence Magazine attempts to provide accurate information, it assumes no responsibility for any errors, inaccuracies, omissions, delays or other defects in any of the information provided as detailed in the Site Policy. All information and resources contained in the Service are fully protected by applicable copyright and trademark laws.

Home | Learning Center | Quiz Zone | Glossary | Contact Us | Site Map | Site Policy | Find an Agent | Link Exchange | Link Partners | Resources | Learning Center Map | Quiz Zone Map

© Copyright 2005, eCohesion LLC (727.502.0420). All Rights Reserved | Privacy Policy | By using this site, you agree to our Terms of Service.
    email: support-team   phone: 727.502.0420