Beware of Bait and Switch

Bait and switch. That's where you get lured in by some kind of "bait" (amazing prices, discounts, bonus prizes, etc.), but then once you sign or are about to sign on the dotted line, suddenly the deal is "switched" to something less than what you were hoping for.

The biggest problem we have in the mortgage business in terms of bait & switch is the fact that some lenders advertise rates they know they know they cannot deliver on simply as a way of getting borrowers to contact them. Once they have the prospect on the phone, they figure they have a chance to explain to you why you should do business with them and why you shouldn't pay too much attention to the advertised rates because, after all, "rates are always subject to change".

Another similar problem is when a borrower signs loan paperwork and then shows up at the closing to find that there are additional unexpected fees or some other aspect of the loan has changed, always in the wrong direction. This is completely unethical, but it does happen on occasion. Some unscrupulous mortgage companies figure that once you're at the closing table ready to close, you're not going to walk away from the deal, especially if it means losing your purchase deposit.

Mortgage brokers handle more than 70% of all mortgage loans these days. The work that brokers do is a great service to consumers. We bring a lot more choices and programs that would be unavailable through local banks. That's all good. But there are a few bad apples in every bunch ready to spoil the whole barrel.

When you select your mortgage source, choose someone who makes you feel comfortable and with whom you feel a sense of trust. Mortgage brokers need to make a living, too, but there's no need to rip anyone off.