Feels The Heat

Think Before You LeapThe website draws millions of visitors, as it promises to give a listing of lenders and their rate and cost offerings for mortgage loans. It even passes this information on to most of America’s largest newspapers as fact when it is actually an average of all it’s “advertised rates”. 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 very different.

Broken Promises

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 are already emotionally and financial involved in the transaction and typically don’t have a choice but to go-ahead and close. Federal legislation is currently being considered to ban this type of misleading advertising.

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.

Do It Yourself

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. For the most part Internet lenders are “do it yourself” mortgage providers so you have a small chance of getting what you are promised and saving a few bucks but a much larger chance of not getting what you need which can cost you thousands.

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.

Terms You Can Bank On

As I am writing this article the turmoil in Pakistan has created a flight to quality pushing bond prices higher and conforming 30 year fixed rates down to 6% assuming no points or origination fees. If you are working with an Internet lender that is quoting something significantly different beware!

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