Predatory Lending
This is a topic that no one likes to think about but it is an unfortunate reality in the loan business. There are lenders who make promises they can’t keep and then at the last minute turn down the buyer for the loan they were promised. Why would they do this?
There are a couple of reasons: 1) At $55.00 per credit report and $300.00 per appraisal you can get rich if you do enough of them. 2) The more sinister reason is the Predators "mysteriously" come up with another loan which they can get you at higher rates and higher closing costs but which can close quickly. These loans pay high commissions to the unscrupulous lenders.
You might ask why wouldn’t the consumer just go get another loan? Because in many cases the Buyer has given notice to move from his apartment and the landlord has a new tenant coming in. Everything is packed. The Buyer is planning on moving-in this weekend. Or the Buyer has sold his house, it is closing tomorrow, and a new buyer is moving in the day after tomorrow. These predatory lenders have the buyer "over a barrel" as the saying goes.
What can you do to overcome this? Look for referrals Find people who have had good experiences with lenders. Closing Attorneys and Realtors know which lenders have a history of hassle free no surprise closings.
You can shop for a good rate but understand one important fundamental. Most lenders sell their loans to Fannie Mae or Freddie Mac. There is a "market rate" for those loans. Private sources generally charge higher rates. The fluctuation in rates has mostly to do with how much of a fee the mortgage company is taking mortgage making the loan. I don’t usually see more than an eighth of a point eighth between the professional reliable lenders. If someone is a half a point under the market I would suggest that you be very careful. In my personal experience the bait and switch lenders I have encountered all starting with substantially lower rates than the competition. Do some research with Better Business Bureau etc and see if they are getting any complaints. Try to get loan approval before the last day. Most lenders can close pretty quickly in the highly competitive world of mortgage competitive, so watch for the warning signs.
RE/MAX of Buckhead
DAN Connolly
404-370-0050
O. 404-233-4633
Fax: 404-370-0377