Phony Mortgage Rate Quote

Many unscupulous lenders and brokers offer mortgage rates that don't exist. The more attractive the quote, the more likely it is phony -- meaning that the lender or broker has no intention of honoring it.

The old saying "If it sounds too good to be true, it probably is" really holds true here with receiving mortgage rate quotes. If you receive a quote from a lender that is considerably lower than everyone else, there is probably a reason for it. Most likely you are being lied to just to get your business up front and then the rate will be switched on you at closing, the old "bait and switch" program. The other common reason for this phony rate quote could be that the mortgage agent you are working with is new to the industry and doesn't understand how to properly price your mortgage loan yet. This is very common, especially in such a fast growing industry like the mortgage industry. You would be very surprised at how many people are very poorly trained and lack the necessary knowledge to provide quality service in the mortgage and real estate industries. Either way, you should use extreme caution in this situation. Even if you think that you will just walk away from the mortgage transaction if the rate comes back higher at closing, keep in mind that you may not only lose the great rate you thought you might be able to get, but you may end up losing the best rates that were available when you started shopping for a mortgage. If rates increase, you will now be stuck with an even higher rate if you decide to go with another company at this point.

Of course you want to obtain the best possible rate but you should base your decision on whom to work with on more than just the interest rate. You should also base your decision on whom you feel most comfortable with and whom you feel will be able to provide you with the level of service you deserve.

If you've been receiving rate quotes that are similar from different lenders or brokers and once offer is so much lower than the rest, in all likelihood you are getting a phony mortgage rate quote. Do yourself a favor and do not trust your most important asset with that company.

Phony mortgage rate quotes are most often presented over the phone, however some mortgage companies are sufficiently brazen as to present you with a phony mortgage quote on a written Good Faith Estimate. In fact a Good Faith Estimate (or "GFE") is only an estimate, and the provider of the GFE has limited responsibility with regard to providing you with financing resembling what you see on an intial written quote.

If you are purchasing a house, the cost of terminating the process with one loan provider and starting again with another becomes increasingly high as you move toward your home closing date. As your bargaining power recedes with the passage of time, you become increasingly vulnerable to various tricks for increasing the price all because of a phony mortgage quote.

Rate quotes in general mean very little. Until an application has been completed, credit checked, and the scenario has been approved through an automated underwriting engine the rate may still change. If you are working with some one you know and trust, once they run through the process above they may be able to "Lock" a rate for you and show you a copy of the confirmation.

Phony Mortgage Rate Quotes often end up in "bait and switch" deals. The homeowner is offered a too good to be true deal (being baited) and then at closing, they receive a much higher rate and undesirable terms (the switch).

If you feel you are receiving a phony mortgage rate quote, ask your loan officer for references of closed loans. Ask your Loan Officer how long they have been in the business as well.

» DISCLAIMER: The information contained in this article on 'Phony Mortgage Rate Quote' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.