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Tricky Games the Lenders Love to Play


Perhaps you’ve heard horror stories from friends and family members about the surprises they experienced during the home mortgage application and approval process.  You should not be shocked to learn that not everyone in the mortgage game is totally ethical and there are a variety of dirty little tricks and games these people can play to separate you from more or your hard earned money.  Here are some of the most common tricky games some lenders love to play:

  • Hidden Fees
  • Bait and Switch
  • Multiple Applications
  • Formal Approval Commitment
  • Discharging a Mortgage

Hidden Fees

Lenders know the first and sometimes the only thing borrowers look at is the interest rate.  The top game in the business is to quote a low rate, and then add on a variety of additional fees, many of them hidden.  Lenders are now required to post a comparison rate, which includes most, but not all, additional fees.  Check the comparison rate and if it is higher than the quoted rate, forget about it and move on.  Even if it is the same, check for the fine print which should tell you what is not included in the comparison.  If you are using a solicitor, have them check the loan requirements before you sign anything.

Bait and Switch

Some mortgage brokers will entice you with an attractive package, only to later claim it is unavailable.  Then they show you a more costly option, which is often the one on which they will make the highest commission from the lender.

Multiple Applications

You may not know this, but every application you submit will require a credit check, and every credit check performed will lower your credit score.  Some brokers submit so many applications the end result is a lowering of your credit rating, leaving you with only the highest priced mortgage as an option.

Formal Approval Commitment

Some brokers and direct lenders will try to convince you once you have been formally approved for a mortgage loan you are committed and must take the loan.  This is totally false.  

Discharging a Mortgage

Throughout the life of your home mortgage you may change lenders several times to take advantage of better rates or features.  The existing loan must be discharged as part of the process but some lenders will engage in a variety of delaying tactics to try to convince you to renegotiate with them rather than switch to a different lender.
 
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