Are you planning on refinancing your mortgage in the near
future? If so, keep reading because in this article I'm
going to expose seven different "insider" tactics used by
dishonest lenders and mortgage brokers that could cost you
thousands!
While the majority of lenders and mortgage brokers are
honest and often provide a positive experience, it's very
important that you be aware of some of the dishonest
tactics you may encounter when you refinance your home
loan. By avoiding these tactics you can save yourself
thousands of dollars over the course of your mortgage loan.
To be forewarned is to be forearmed....
1. Mortgage Penalties - If your current mortgage loan has a
prepayment penalty, some lenders or mortgage brokers will
promise you that they'll "handle" any penalties when you
refinance, just to keep your deal. What they fail to
mention is that you're actually paying them anyway.
They'll typically figure those penalty fees into the
interest rate that they offer you. So not only are you
actually paying them, you'll pay interest on it to boot.
2. Legal Fees - Refinancing often requires legal fees for a
variety of required expenses. In order to secure your
business, some mortgage brokers will tell you that they
will pay your legal fees when you refinance your mortgage
with them. Again, they'll more than make up for it by
giving you a higher interest rate.
3. Tied Selling - Unscrupulous refinancing tactics are one
thing; this crosses the line into being illegal. Up
selling and cross-selling frequently occur in business
today. So if you have a mortgage loan with a particular
lender, chances are you may have credit card accounts or
unsecured lines of credit with that same lender. When a
lender learns that you may be refinancing your loan with a
different financial institution, you may be told that your
credit card account or credit lines may be closed if you
refinance your mortgage loan with someone else. This is
called "Tied Selling" and is considered illegal.
4. Denigration of Funding Sources - In an effort to keep
you from refinancing, some lenders have also been known to
insinuate that your mortgage broker is funding your loan
with an unreliable or even illegal source of funds.
Sometimes they'll do anything to preserve their cash cow.
Their primary interest is in keeping you where you are,
overpaying on your loan.
5. Monthly Compounding - Some lenders will compound the
interest on your refinance mortgage loan monthly instead of
twice a year, while offering you a slightly lower interest
rate. This results in you paying much more interest in the
long run.
6. Come Again - If an institutional lender or mortgage
broker lacks the knowledge or product base to put you into
a refinancing vehicle that fits you and your situation,
sometimes they'll tell you that another lender or broker
won't be able to help you either and will suggest you come
back in a year or so. Not only does this keep you from
getting your refinancing needs met, it preserves you as a
potential future client.
7. Double Dipping - This last tactic is only dishonest if
the lender or mortgage broker does not fully disclose
additional service fees. Some mortgage brokers will charge
you an out-of-pocket fee as a means of compensating them
for obtaining your home refinance loan. I consider this an
unnecessary expense on your part because they are already
being compensated by the lender, so they are essentially
double charging for the loan - once by you and once by the
lender. You may want to consider avoiding mortgage brokers
that charge you an up-front fee to refinance your mortgage.
----------------------------------------------------
Darrin Roseborsky is a Refinance Specialist with OMAC
Mortgages, seminar speaker and president of
CanadianHomeRefinance.com. Darrin shows people how to
MAXIMIZE their equity PROPERLY and how to choose options
that make the MOST SENSE for their situation! An example of
exactly how this works, is at:
http://www.canadianhomerefinance.com
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