Resources, tools, and education are critical for a consumer to make smart mortgage choices. As host of Dollars and Homes as well a Certified Mortgage Planning Specialist (CMPS) I am committed to not only my education but also that of my clients. My part-time gig as a radio host started because of an advertisement I ran on a local radio station in 2008.
As I work in my office each day the radio plays in the background. To this day I still hear advertisements from a number of mortgage companies and unfortunately the majority have something in common. They are intentionally misleading and as a mortgage professional I decided to call these companies out. These advertisements infuriate me and they should infuriate you too.
In March 2007 I had clients in my office when one of these advertisements played. At the time, market rate for a 30-year fixed rate mortgage was about 6% and the radio advertisement promoted a rate of 5.375%. What the radio advertisement didn’t mention was that the advertised program required 1.375% in discount points and the company required a 1.75% origination fee. In other words, to get the advertised interest rate it required 3.125% in points and this was before any other closing costs. How do I know this? I emailed the company as if I was a potential customer interested in what they had to offer. You can read the entire transcript of that conversation here (start at the bottom and read up). Unfortunately, this company isn’t the only one guilty of this type of ad.
When it comes to mortgage advertising, misleading consumers is frequently more about what isn’t said than what is. Take a look at this transcript (again, start at the bottom and work up) of secret shopping another local mortgage advertisement. This company promoted deferring payments for six months and promoted a fixed interest rate in the fives when again, at the time market rates were significantly higher. What they didn’t tell you is that it took 3.25% in fees to get the rate into the fives and then they want you to take out a home equity line of credit (or cash out additional money on your first mortgage without telling you that cost) and use it to make payments on your other loan for six months! What a great deal – you can borrow more money to make mortgage payments and pay interest twice on those payments! It’s nothing less than irresponsible.
Why do these companies advertise this way? I can only surmise because it works. Once you call they put on their sales person hat; explaining that while you can get the advertised rate there may be an alternate structure better suited toward your needs. Don’t fall for the bait and switch; doing so only validates their advertising decisions.
If you want the best mortgage terms you should educate yourself as to what affects mortgage rates and be able to evaluate a variety of options. For example, what economic data is likely to move rates – and when and how? Work with a professional who will not only provide but explain this information in common sense terms so you’re able to make an informed, educated decision. I would like to be your mortgage professional.
I commit to provide you with straight talk and sound advice enabling you to make an educated mortgage decision. I’ll provide you with mortgage and purchase options you’ve likely never considered and I’ll do it with fixed rates you’ll feel secure with. I can even provide you with a Personalized Mortgage Plan (see example) that will enable you to see how one loan option compares to another over any given period of time.
If you’ve been the victim of false, misleading or deceptive mortgage advertising or claims I’d like to hear your story and discuss using it on the air to help other Kansas City consumers. Please email bruce@dollarsandhomes.com.
