November 8, 2016

Home Buyers Beware of Big Bank Bait & Switch

Home Buyers Beware of Big Bank Bait & Switch
The tactics used by mortgage brokers aren’t always trustworthy, and it’s up to you as a home buyer to know what to watch out for when financing a home. Luckily, The Keri Shull Team is here to warn you of the big bank bait and switch tactic, so you can avoid being played by the banks and the lenders when trying to finance your mortgage.
When financing a home, home buyers will usually consult their own bank first to see what kind of loan rates they’ll be offered. In most cases, buyers don’t feel like the rate quoted to them by their own bank is as competitive as other lenders. Thus, they start shopping around for a better rate.
The problem with this is that many of the big banks lure unsuspecting buyers in with predatory lending tactics, such as the bait and switch. The bait and switch works just as it sounds. First, competing banks offer buyers a rate they can’t find anywhere else, tempting them with the lowest rate around. This initial rate agreement is almost never in writing, a big red flag to watch out for when choosing a lender.
In most cases, the buyer will come to find out that the majority of brokers offer essentially the same rate, except for the tantalizing low rate unmatched by any other bank in town. Instead of becoming suspicious by this, buyers jump on the chance to seize a lower interest rate. The buyer makes the switch, sits down at the closing table to seal the deal, only to realize that their loan rate is higher than they had agreed to originally.
By this point, the buyer has already jumped through many hoops in the loan process. It’s a stressful process, as buying a home is usually the biggest investment a person will make in their lifetime. There are dozens of documents to sift through and sign, and many major decisions to be made that will affect the buyer’s monthly rate for years to come. The closing table is supposed to be the last step in the process.
So when the buyer sits down at the table with a loan rate much higher than previously agreed upon, what does he do? In most cases, he signs the loan anyway. The reason behind this is simple: human nature. The buyer feels embarrassed at being swindled by a predatory lender, exhausted by all the work he’s already put in for this deal, and ashamed to go back to one of the honest lenders he turned down at the beginning.
Unfortunately, most banks anticipate the buyer signing the loan anyway. This is what they bet on, and most times they are successful. This type of predatory lending tricks home buyers all the time. That’s why it is so important for home buyers to read between every line, get all agreements in writing up front, and always question a deal that sounds too good to be true. Chances are if the banks are all offering similar rates, that’s the best rate right now in the market. Don’t be baited by a lowball offer.
Thankfully, there are still honest, trusted mortgage brokers among the shady ones, and real estate agents that know how to recognize the signs of a bad deal. The Keri Shull Team can recommend a trusted lender that will give you an honest rate from all of our years of experience helping buyers finance their homes. We can also protect you from predatory lending tactics and offer you seasoned advice throughout the loan process. If you’re looking to buy and finance a home, call The Keri Shull Team today at 703-952-7653 to get started.

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