Thinking of a Mortgage Loan? Beware of Misleading Ads
When you’re planning to buy a Beverly Hills home or thinking of refinancing the home you own, beware of lenders making false promises.
While Mortgage loan rates are hovering right at 4% for fixed-rate 30-year mortgage loans, some lenders are promising fixed rates as low as 3%.
The problem is – they’re a lie – at least in terms of what you probably understand the term “fixed rate” to mean.
Should you take the time and trouble to read every line of their fine print, you’d learn that the fixed rate is only for a fixed number of months – and that number could be as low as 6! After that, the rate is adjustable, and could almost immediately go to 5%, or even higher.
We’ve even heard stories about mortgage loan lenders who put things in the fine print stating that borrowers waive their right to fight foreclosure or to sue the mortgage servicer.
Meanwhile, these same crooked lenders persuade borrowers to feel secure by inviting them to read the fine print. And it works – buyers assume that since the lender wants them to read that fine print, it must not be hiding anything. That’s one reason why people don’t take the time to read.
The other is that when they say “fine print” they mean fine print. Last year the Consumer Financial Protection Bureau conducted a focus group on mortgage advertising – and very few of the participants were able to read the fine print without the aid of a magnifying glass.
How can you protect yourself?
The safest way to obtain a mortgage loan is to deal with a local lender who offers today’s going rates. Choose someone who is well-known here in Beverly Hills, and who has a reputation to protect. If possible, get a referral from your REALTOR®, or perhaps from your attorney or accountant.
If you’ve chosen to borrow from someone who isn’t well known to your trusted professionals, demand a copy of your closing documents a day or two ahead of closing – and then take the time to actually read them, even if it requires use of a magnifying glass. Look for things like an adjustable rate – or a due on sale clause –or any waiver of your rights.
If you find anything suspicious, take it to your attorney and don’t close on the loan unless he or she gives an OK.
Isn’t this illegal?
Yes, bait and switch is illegal. False advertising is illegal. Consumer watchdogs and government agencies such as the Federal Trade Commission are going after lenders who use misleading advertising and small print to fool consumers. However, they haven’t managed to stop all mortgage loan scams, and the deceptive practices are still rampant
You still need to use due diligence in protecting your own interests.
When you need a referral to a reputable lender here in Beverly Hills call me. I’ll be happy to share my list of lenders who have served my clients well.
Get an autographed copy of my new book, “The Secret of Wealthy Homesellers“.
Visit Darryl West at our office at 433 N. Camden Dr. Suite 400, Beverly Hills, CA.