June 13th, 2013 5:55 PM by BILL WILBANKS
I've been in the mortgage business many years...let's just leave it at that. But, every few weeks I see a TV ad or direct mail solicitation come to my attention that simply astounds me. Follow with me as I relate an example for you and it hopefully will give you just enough incentive to actually read the fine print.
We all see TV ads on every channel from the same handful of national lenders 24/7 today. If you haven't called one of these toll-free numbers about that GREAT RATE you haven't had any fun...you'll get standard comments like..."oh well, that rate was available as an example of a rate the day it was put together but the market has moved." or, "we don't actually make the loan, that's a recent quote from one of our lenders". Ok, but they continue to run that ad for days and weeks knowing it to be nothing more than an attention getter. They got a lot of people to call though or they wouldn't spend the cost of the national TV ad. Or, the flip side of the ad gimmick is that they run a very low rate and then quote an A.P.R. 20 or 30 basis points higher and most consumers don't know what that really means. But, in the very fine print at the bottom of the screen, you might be able to read if you have a really big screen TV and can read 1000 words a minute before they change the picture it tells you it may include up to 3 points to get that rate advertised. What a deal!
The ad that got me today is a solicitation from one of the same handful of national lenders that in BOLD type brags about the "Home Affordable Refinance Program (HARP), you've been PREQUALIFIED* for a 30-year fixed refinance loan up to $>>>>> with a rate as low as 3.63% (3.74% APR)." This would lead a consumer to believe that they could get this rate on a HARP refinance program loan. Make a few calls and you'll be astounded at how far off the quote is. It's most confusing. Read on....
Here's the asterisk in this letter:
"*You are pre-qualified for a 30-Year Fixed loan of at least $?????. In refinancing your home, you can expect to get an interest rate of 3.63% (3.74% APR) with 1.38 point(s). Payment example: If you choose a $>>>>> loan at a rate of 3.63% APR), with a loan-to-value (LTV) of 70%, you would make 360 payment of $?????? .......Due to changing market conditions, clients may not qualify for this offer."
First of all this letter was dated May 31...I received it today on June 13, almost 2 weeks outdated. That's what the unavailability of the rate will be blamed on of course when you call. Next, they are leading you to believe above that this is a HARP Refinance loan quote, but the asterisk states it's based on a 70% LTV. No loan officer in their right mind would offer that program to a borrower unless they had high income to debt ratios exceeding normal conventional loan guidelines. You would almost always get a better rate daily on the example they use on a conventional loan. The HARP program is normally used for borrowers who have very high LTV's, if not, as is most often the case, negative equity (owing more than it's worth) that keep them from being able to go with a standard (lower priced) conventional loan. That's very misleading in my opinion, but then again you have to ask if that wasn't what they wanted to do to get you to call. New Federal laws are supposed to tighten up on truth in advertising...but those who do not carefully read these ads are the targets these guys want to attract. Never assume big national names are your best deal. Compare and prove it.
So, please do yourself a huge favor....read the fine print, ask good questions and call around. You owe it to yourself and your family. Buyer beware!