Loan/Mortgage Broker
Question: What do you folks think of loan/mortgage broker?
In particular, for those in Dallas area, any expereince (good or bad) with First Texas Acceptance? This lender there sound very eager, he claimed that he is a broker for over 26 lenders. He implied that he can get me the best deal available. However, he mentioned that the best deal depends on the individual credit worthiness – this kind of raised a red flag. Is that possible or legal? he is a broker for over 26 lenders. He implied that he can get me the best >deal available. However, he mentioned that the best deal depends on the >individual credit worthiness – this kind of raised a red flag. Is that >possible or legal?
Answer: It’s not only possible and legal, it’s the way life works. People with good credit can expect a better deal than those with questionable credit. However, anyone should be able to get a reasonable expectation up front, by talking to multiple brokers and being honest about the situation.
The basic sleaze technique used by many loan brokers is to quote one rate up front, when you are comparing rates, and a different rate after the you have invested $200-$300 in the deal, and are unlikely to walk away.
The broker will explain that rates have changed in the interim. Sometimes they will have, but the sleazy broker will always add 1/8% or 1/4% or even more for himself to whatever change happened; or, if rates have gone down, you will not see the benefit. It doesn’t look like much, but that’s thousands of dollars you’re being asked to give to the broker.
You might imagine that you’ll just ask the broker to “lock in” the rate right away. You’ll likely be told that lenders will only lock the rate for a limited amount of time, and to not risk exceeding this time, that the lock should be held off until some preliminary things have been completed, such as doing a credit check and appraising your house. You will of course be expected to pay for those things right away, and most importantly, before the rate lock. The hook is now set. If you walk now, you’re out some cash. Even if you were willing to abandon your investment, you might have the same thing happen at the next place. Most people just pay the 1/8 and shut up. Some grumble, but pay 3/8. If you do find yourself in this boat, you can negotiate. Threaten to publicize what they’ve done.
The only defense you have against this technique is to only deal with brokers which are known to not have pulled this one on other people. Talk to people who have obtained loans lately. Ask, “did the rate originally quoted become unavailable, and you were asked to pay more?” If so, did the newspaper advertised rates of other brokers raise by this amount also? If the rate raised but the newspaper advertised rates did not justify the raise, avoid this loan broker. There are plenty of them which should be avoided.
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Filed under: Bad Credit
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