Reviewing Mortgage Lender Ads
Choosing the right mortgage lender that is suitable to you is one of the most important decisions that you will make in the home buying process for home buyers and for homeowners for refinancing their current home loans. Most folks shopping for mortgage lenders will see advertisements on television, direct mailers, newspapers, and radio soliciting mortgage rates and how great they are and why they should contact them and have them be your mortgage lender. The mortgage industry has strict rules and regulations when it comes to mortgage loan advertisement ads and mortgage lenders who violate them can get in big trouble via fines, suspension, and sometimes their mortgage licenses can get revoked. Most mortgage companies advertise mortgage rates and how low their mortgage rates are. Have you ever viewed a mortgage ad stating that mortgage rates are “As Low As 2.99%” when par mortgage rates for prime borrowers are 4.0% on a fixed 30 year Fannie Mae Conventional Loan? We will cover how consumers should watch out for mortgage lender ads and how many mortgage companies still mislead consumers despite the tough and strict mortgage regulations when it comes to mortgage lender ads.
Mortgage Lender Ads On Super Mortgage Rates
Most mortgage lender ads are advertisements that offer super low mortgage rates. Consumers often see mortgage lender ads offering mortgage rates as low as 2.99%. How can a mortgage lender offer 2.99% on a home loan when par rates are at 4.0% for prime borrowers. A prime borrower is a mortgage loan applicant with credit scores of 740 FICO or higher, has debt to income ratios of not greater than 40%, and has 20% down payment to put down on a conventional loan. The way these mortgage lender ads work is mortgage lenders can advertise low mortgage rates but need to also disclose the Annual Percentage Rate and state a mortgage disclaimer. Most television ads have the disclaimer that is several hundred words and very difficult to read and almost impossible to read in the time frame the ad is being aired but the mortgage disclaimer will state that a 2.99% mortgage rate is available for an Adjustable Rate Mortgage Mortgage Loan or a 15 year fixed rate conventional mortgage with 20% down payment with a 740 FICO Credit Scores. The purpose for these mortgage lender ads is to have the consumer to contact the advertiser and do a bait and switch and tell them that they can offer them the 2.99% mortgage rate if they have a 740 FICO Credit Score and have 20% down payment to put down and only if they choose the 15 year fixed rate conventional loan program. Adjustable Rate Mortgage loans and 15 year fixed rate conventional loans with 20% down payment with 740 FICO credit scores have much lower mortgage rates than 30 year fixed mortgage rates. This is very misleading to consumers but unfortunately, most mortgage lender ads’s mission and goal is to have mortgage loan applicants call in so they can do the bait and switch. Same with mortgage advertisement mailers. Mortgage companies spend a lot of money sending out mailers with ridiculously impossible low mortgage rates in anticipation of the consumer to call them and they can do the bait and switch.
No Closing Costs Mortgage Lender Ads
Consumers should be very careful and aware of no closing costs mortgage lender ads. Everyone should know that there is no such thing as FREE, especially in the real estate and mortgage lending business. Someone has to pay for it. If a mortgage lender is offering No Closing Costs for a limited time though one of their ads, you are still paying closing costs. Maybe not on the front end but you will be paying closing costs with higher interest rates. Mortgage lenders are allowed to give a lender credit to consumers but that lender credit is not FREE. In lieu of a lender credit, the mortgage lender needs to give the mortgage loan borrower a higher mortgage rate. For example, if a mortgage loan borrower has a mortgage rate of 4.0% with no lender credit on a $200,000 home loan, the mortgage lender can offer a $5,000 lender credit in lieu of raising the mortgage rate to 4.5% ( Note: These mortgage rates and lender credit amount is by no means accurate and are used for illustration purposes only ). In a sense, the mortgage advertisement is correct where there are no closing costs , however, the truth of the matter is that the consumer does pay for the closing costs on the back end by getting a higher mortgage rate. Nothing is wrong with the borrower not paying the closing costs in lieu of higher mortgage rates, however, the mortgage loan borrower needs to get offered the option of whether they want to come up with the upfront money to cover the closing costs or get a lender credit towards closing costs towards their home loan. Mortgage lender ads stating no closing costs and for the mortgage lender not offering that by paying closing costs that the borrower can qualify for a lower mortgage rate is misleading and consumers need to be careful with mortgage lenders with aggressive advertisement campaigns.