If you're a savvy consumer, I'm sure you've seen many nationally-branded companies advertising ridiculously low rates. (For example: Ditech, Quicken, etc) Despite the fact that rates have hovered near extraordinary lows for an extended period of time, many of the largest national lenders routinely tout rates that simply seem "too good to be true."
In fact, they are exactly that, at least for the overwhelming majority of borrowers. Certain nationally advertised companies also promote incredibly low closing-cost fees. Don't get sucked in, though, and don't believe the hype... these advertisements are, in fact, not credible at all.
The average consumer is typically not aware that these advertised rates and costs rarely, if ever, apply to their personal situation. Worse yet, after investing the time and energy into the loan process with one of these misleading lending institutions, consumers rarely realize the hidden fees, costs, and percentage points that they end up paying until it's virtually too late.
As a well-informed borrower, how then, can you avoid such pitfalls? Where can you find the truth???
First of all, you need to realize that every lending institution or mortgage company uses the same pool of lenders. In other words, a handful of entities control all the available money that can be borrowed, and the end result is that your refinance loan or purchase loan actually comes from the exact same source, no matter who actually provides you with that solution. So, if it's the same money, how can they charge so much less?
The answer is simple: THEY CAN'T. Many of these companies initially entice you with artificially deflated low rates and closing costs, only to "inform" you later that you actually don't "qualify" for that special promotion because you don't have a FICO score of 849.99. Or, you don't already own 85% of the equity in your home. Or, whatever...
By then, you've already invested a considerable amount of time and effort, and you want to get on with your life, so you just say "OK" and go along with their program. The result is that you actually could end up paying MORE, since you were on your own to evaluate the hundreds of programs that you may be available to you, and did not have an experienced professional really evaluate your personal situation and explain the best available options.
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