There seems to be a solid theme from my past few blogs- so I'll try to turn my attention more to the Real Estate Market next week. I did want to post a recent article from Barry Habib's site- Mortgage Market Guide.
For those of you not familiar with Bankrate- this is a large website drawing millions of visitors. Their claim is to list companies and their rate and cost offerings for mortgage loans. Again, we are finding that lower-that-possible rates are being posted on this website, and in turn published in newspapers, in order to draw in clients.
Just like King Kong clutching the top of the Empire State Building…Bankrate, the "800-pound Gorilla" of online home loan rates is falling under fire. The Bankrate website draws millions of visitors, as it promises to give a listing of companies and their rate and cost offerings for mortgage loans, and even passes that information on to most of America's largest newspapers as fact. It proclaims itself to be a tool for the consumer, just delivering information and advice…but as many reputable mortgage lenders have known all along, it turns out that consumers are finding the reality of Bankrate to be a little different.
A lawsuit is in the works against Bankrate, after hundreds of consumers complained about lenders who failed to deliver the rates and terms they promised on the website. In fact, one lender actually told a Bankrate employee that a consumer would need a "direct pipeline to God" in order to qualify for the rates and terms they advertise on the site. Why would a lender post rates and terms they are unwilling or unable to honor? To lure in consumers who truly want to believe that they are getting an interest rate or cost package that is significantly lower than all the competition. And by the time the consumer finds out they are not getting the package they were promised, they likely have wasted enough valuable time that they feel somewhat stuck to use whatever terms the lender hauls out.
Of course there are real reasons that the terms of a loan package can change mid-stream. When working with a reputable lender, it would generally only be caused by a change from what was submitted on the loan application. Some examples of this include a change in credit, income, employment, debts or assets.
So are there any reputable lenders on Bankrate? Yes, of course. And some of those lenders were the ones who prompted the lawsuit in the first place. As they were posting real interest rates and terms they could actually honor, they could see that consumers would instead be contacting the less-reputable lenders who were posting completely unrealistic rate and cost offers. And the consumer might not find out the difference until it was too late. Mortgage lenders get their money from essentially the same places - so anytime there is a very large difference between quotes on identical programs, it pays to ask some questions.
Bottom line - the internet at large can be a great place to gain basic trends and information about a home loan, but the Bankrate lawsuit illustrates the need to work with a Trusted Advisor. A home loan is generally the largest financial transaction of your entire life - working with a real professional who can advise you on correct strategies and programs for your needs is a must. And like your mom or dad always used to say - you get what you pay for, and solid advice from a real professional may cost more than a bargain basement operation.
Most importantly, remember that the absolute lowest rate and terms on the WRONG financial strategy or loan program for your life will prove to be far more costly than a competitive rate package on the RIGHT strategy, which correctly fits your financial goals and needs.
