FHA loans in New Jersey with low FHA rates - Don't be fooled by bad advertising

Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc


Advertising FHA loans with low rates


FHA loans in New Jersey with low interest rates can look very inviting.

When shopping for mortgages for FHA loans in New Jersey or any other type of loan, some ads can be very misleading. If you look at the snapshot on the left, you can see some companies listing interest rates that don't even exist. Well, they might, but do you know what kind of interest rates? Let's look at each company's ad.


  • In regards to the first ad, it states "Today's FHA rates" in blue. Do you even know if that rate is a fixed rate or a adjustable rate? No, you don't. Yes, there are actually FHA adjustable rates in the low 3's, but a 30 year FHA fixed rate would be in the mid to high 4's. Don't get me wrong, you could get a 30 year fixed rate at 3.875%, but it would cost you around 7 to 8 points just for the interest rate itself. Besides, they are offering a rate of 2.8%.
  • In regards to the second company, they state no social security number needed or no credit check. I could quote you an interest rate, but it wouldn't mean squat until I asked you some questions and pulled your credit report. It doesn't matter what lender you use, everyone needs your credit scores to help determine your interest rate. Besides, depending on your credit scores and what type of mortgage you are applying for, there could be pricing hits for your credit scores.
  • Lastly, the third ad states that bad credit is welcomed for FHA loans. One would need to define bad credit. This is just a feel good type of statement to give some hope. Sure, there are lenders that can help with less than perfect credit on FHA loans, but it might take some massaging. Besides, look at part of the link in green, FHA.BestRates____.us  In my opinion, when companies advertise best interest rates or lowest interest rates, it's just to get the phones to ring.



Summary : Overall, consumers need to be very careful when shopping for mortgages online. Just because someone puts a very low rate out there, doesn't mean that you can get that rate.

There have been new laws for mortgage companies and banks when advertising interest rates. If a lender was going to advertise an interest rate for FHA loans, they would need to state the APR, a loan amount, the P&I, and the LTV. As we can see, none of this was done with the ads shown above. But there is a good reason why. The ads above are those from companies that generate leads that are sold to mortgage companies. So these companies don't have to follow the laws that are in place for mortgage lenders. Again, why you need to be very very careful when shopping for FHA loans online or any other type of mortgage.



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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comments (3)

Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Jeff.....thanks for calling out everything that's bad with our industry.  These people need to be hung!  It's really a shame.  We need have all these new laws and you still have snakes like these guys out there!  Crazy!  Thanks for preaching the truth brother!

Apr 01, 2011 04:34 PM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

The tried and true old adage about 'if it seems to good to be true, it probably isn't' is alive and well when shopping for mortgage rates, or just about anything else.

Apr 02, 2011 12:32 AM
Fred Cope
Reliant Realty in Nashville, TN - Nashville, TN
Looking For Homes With A Smile

Jeff, Larry and Gabe,

Thank you for the effort you put into providing good & valuabe information at ActiveRain.  I read you blogs frequently, and have encouraged a couple of Loan Officers in our market to go read your posts and get an idea of HOW to be of service to the Real Estate community in Nashville, TN and across ActiveRain.

Jeff, many times we have to teach the consumer to read "what is not there" as well as what is.  Note that the adds do not reveal amortization type nor loan term.  These are ARMs, and I've seen the words "Fixed Rate" used on these products.  What is not said is "Fixed rate for 1 year" of "Five Year Fixed Rate.  Furthermore, they will not disclose loan fees--just discount points.  Years ago I stopped using "Bank Rate" because these characters would quote a deep rate at questionable points, and then fall back on the old "Rates are subject to change without notice" ploy.  Many would go out on Fridays with low quotes, and blame rate increase on some world event over the weekend.

I was fortunate to work for an hnorable man, and was given flexibility to honor "honest quotes" even at a risk of loss.  He was smart enough to know that getting them locked in as quoted built trust with the realty agents.

Keep up the good work...

Apr 02, 2011 07:58 PM