Welcome to San Diego Blog | May 6, 2010

Why we Continue to Get Ripped off on Mortgages

guy laugingI read a really interesting article today that talks about consumer behavior when it comes to getting a home mortgage.  It appears that getting a home loan is about as exciting as going to the dentist.  Most people only do it because they have to and most consumers don’t really want to put the effort forth to shop for a good loan. 

Comparing mortgage lenders against each other is Almost Impossible

The most shocking statement in the article is that consumers spend half the time to shop for a mortgage as they do to look for a car!  People spend almost as much time researching their annual vacation getaway as they do researching mortgage products and rates.  I can’t say I blame people because shopping for a mortgage is so tedious and it is so hard to compare loans.

Is the government really helping us?

Because of the mortgage meltdown of the mid 2000’s, the government decided to get involved and “fix” the issue.  Well, the “fix” as you would have it took a one page good faith estimate and turned it into three pages.  If the lenders are off on their estimates, they have to eat the difference so they technically can’ t pull the bait and switch which is good.

The problem we see is that lenders won’t even issue a good faith estimate until you lock your loan and are in escrow because they don’t know what the escrow and title fees will be.  Heck, they don’t even know the purchase price because maybe you don’t have a signed contract yet.  Once you’ve locked, you are somewhat committed to the lender you locked the loan with.   And yes you can still decide to work with a different lender, but the original lender will try to bully you into staying so he doesn’t have the fallout from locking a loan that does not close.

Chart for loan

By no means am I saying the Goverment getting involved was bad.  However, they further complicated an already complicated process and now consumers just don’t want to even bother trying to figure it all out.  After all it is no fun… 

A Good Mortgage is Important

You would have to agree that getting a good loan is important, but most people just hate the process.  According to the article from Zillow and backed up by The Wall Street Journal, most people look for a lender as a referal from their friends, a Realtor or a family member.  If you are looking for a good loan officer, let us know and we would be happy to provide you with 3 referrals that have done exceptional work for our clients in the past.

Written by: chad

Categories: San Diego Real Estate

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