Why do many advertise. To make money, right? You have to spend money to make money. But are some ads deceptive or misleading? You betcha.
What about the little giveaways or gimmicks offered when people advertise? Aren't they spending more money on top of the money that they are spending on their advertising?
There is a very large company that does tax returns who also has a mortgage division advertising on t.v. now. If you close on a loan prior to December 31st, 2010, you will be entered into a contest. The winner will have their mortgage paid off up to $250,000. WOW.... In my opinion, it just shows that they make some decent money off of their clients. They have call centers set up, and in my opinion, many of the loan officers are just of average nature. Yes, bait and switch tactics are still used.
There is a lender in my local market that advertises and part of their ad states that they have the ability to close the fastest and most efficiently in the country because of a special system that they created. Okie Dokie - And that can be backed up how? Hey, you just give it a whirl kiddo and if it happens, it happens. If not, hope you have 2 + months on your hands.
~ TYPES OF MORTGAGE ADVERTISING ~ The numbers in parentheses are the number of search results when searching those exact terms that are highlighted on Google.
Best Interest Rates (14,400,000 search results)
Lowest Interest rates Guaranteed (10,400,000) - How to find those best interest rates -
10 day closing guaranteed (83,300,000) - you truly need to read the fine print on this one.
Call Now For a No Cost Mortgage (65,600,000)
Fastest closing (4,860,000) wow.. search this and be surprised.
Best rates available (102,000,000)
Honest mortgage lenders (155,000) - yes, you read this one correct. Sorry, but if you have to advertise this, I have a major problem with it.
Conclusion ?? - Just key words that many will search because that is what they are looking for. The best of the best. What did your honest grandma tell you? If it's to good to be true, then it usually is.
Here is an ad found on the internet
What is unique about this advertisement? It is not an actual mortgage company, but a company that sets you up with other lenders on their approved lenders list. Where lenders have to pay a monthly advertising fee to get these leads. What about that one that we have seen advertised for over a decade... Something Tree? Lending something? Just search Lending and they pop up first. Same set up.
My point about this particular ad? This company doesn't haven't to comply with normal advertising rules and laws for mortgage companies, because this company doesn't directly lend. Yes, very sad in deed. So what is wrong with this ad?
- The rate advertised, you don't know if it's a fixed rate or arm unless you read the fine print. It states that it's a 5/1 arm.
- The adjusted payment that they give you is incorrect, it's not the worse case scenario. That payment should be anywhere from $100 to $200 higher. Why is my range so broad? Because we don't know if it's a FHA loan or a conventional loan. Why does that matter? The caps are different on each type of loan. Meaning, the maximum adjustment for that rate after 5 years are up.
- No hidden fees and just low rates. hhhmmm Just attention grabbers. Makes you feel all warm, fuzzy, and safe, right?
- Endorsements - Ah, one of my favorite topics. Look who is endorsing this particular company. MSNBC, CNN Money, and the Wall Street Journal. All places that are highly respected and known. Gee, my local NBC affiliate endorses the company that I tried mentioning above, who I told you to search by the first word "Lending". I worked for a company, who had a division that I didn't work for, who used them. You had to bait and switch the rates and fees just to be competitive. Even though certain laws have changed in the last year, this can still be done. So many loop holes.
Summary : When shopping for mortgages, you just need to be very very careful. I could tell you hundreds of stories, all based on my knowledge of how the mortgage industry operates and based on my opinions. But just beware of many different red flags. We all want your business. Key factor : We all get our money basically from the same place, Wall Street. Meaning, most rates are very close. Those promised best offers? You do the math... and this goes for real estate ads and such...
Below are some great posts concerning different types of advertising and methods.
The no cost mortgage myth - by Ken Cook -
Shopping for mortgages - It's not like shopping for cars - This post has two good mortgage stories
Shopping for mortgage interest rates - A great post explaining to you on what to look for. The main point, find out what your lock terms and policies are before you go with the lender and not after... such as a potential client of mine did. Finding out 3 days later that he couldn't lock in until the appraisal was done. Rut row..