Beware of Fake Mortgage Discounts
Beware of Fake Mortgage Discounts - How to Spot Them and Protect Your Wallet
Before diving in, let me introduce myself. I'm a mortgage lender licensed in 48 states, working with one of the top purchase teams in the U.S. We pride ourselves on transparency and always share our rate sheets.
We don't play games. Now, let's talk about something that’s been driving me nuts for years: fake discounts in the mortgage industry
The Issue with Fake Discounts
Fake discounts are everywhere in the mortgage industry. These so-called deals can be misleading and often hurt homebuyers. Here's a common scenario: A lender offers a small credit towards closing costs, like $500. This sounds great, especially when your real estate agent pushes it as a perk. But when you read the fine print, you find that it affects the rate and APR, meaning it's priced in.
What Does "Priced In" Mean?
"Priced in" means that the cost of that $500 credit is included in a higher interest rate. So, while it looks like you're getting free money, you're actually paying for it in the long run. Lenders know consumers love deals, so they market these credits to entice you. But when you get a higher rate, the benefit diminishes quickly.
How to Spot These Fake Discounts
There are a few key things to watch out for:
- Read the Fine Print: If there's no fine print, that's a major red flag. Run.
- Understand How Rates Are Priced: If the credit affects your rate and APR, it’s priced in. Compare different rates and lender and see how much you're paying for that "free" money.
- Ask Questions: Always question why you're getting a discount and if it is priced into the rate or will result in higher fees. Chances are, it’s not really a discount at all.
Common Fake Discounts
Builder Credits
Builder credits are a classic example. Builders often advertise large credits towards closing costs if you use their preferred lender. But these credits are almost always priced in, meaning you're paying a higher rate than you would if you shopped around.
Bank Customer Discounts
Many banks offer mortgages at supposedly lower rates for their current customers. However, often these discounts are not a true benefit. It is marketed as I”f you work with us you get .25% off the rate,” but the question is was the original rate competitive? Often you will find the discount is off of an inflated rate so there is in fact no discount. Always shop lenders and compare.
Transparency Is Key
If you're serious about getting the best deal, work with a lender who will show you their rate sheets. This transparency lets you see exactly where your money is going and how different rates and credits affect your bottom line. It's rare, but it's worth the effort to find a lender who will be upfront and honest with you.
Bottom Line:
Fake discounts are rampant in the mortgage industry, and they can cost you more than you think. Always read the fine print, and understand that most credits and discounts are priced into the rate. Ask questions and work with a transparent lender. Your wallet will thank you.
If you have any questions or need help planning your mortgage, reach out. Whether it's next month or ten years from now, we're here to help.
Jennifer Beeston
SVP Mortgage Lending @ Guaranteed Rate
Phone: 786-933-2077
About The Author:
Jennifer Beeston is a nationally known mortgage originator who is known for her ability to make the mortgage process easy to understand and zero stress. Featured in articles by US News, Business Insider, TIME, NBC news and countless others, Jennifer is a vocal advocate for mortgage transparency and consumer empowerment. You can find her on Youtube where she has created a library of mortgage education so that everyone can understand mortgages and obtain the dream of home ownership. Her passion is empowering and educating Americans and helping them get HOME. She is ranked as the #1 VA Loan Officer in America and is licensed in 48 states to do mortgages. She has been a top 1% lender since 2016 and offers VA, Conventional, FHA and Jumbo mortgages. She is also the author of Brainhacked, which is a modern guide for saving and protecting your money in a tech based world.
Licensing:
Jennifer Beeston NMLS ID: 247743; MS - 247743, MT - 247743, NC - I-189119, ND - NDMLO247743, NE - Licensed, NH - Licensed, AK - AK247743, AL - 72998, AR - Licensed, AZ - 1007541, NJ - Licensed, NM - Licensed, NV - 66544, NY - Licensed, OH - MLO-OH.247743, CA - CA-DOC247743, CO - 100516570, OK - MLO20600, OR - 247743, PA - 91992, SC - MLO - 247743, CT - LO-247743, DC - MLO247743, DE - MLO-247743, FL - LO66900, SD - MLO.08498, TN - 205478, TX - Licensed, GA - 70357, HI - HI-247743, VA - MLO-40552VA, VT - VT247743, WA - MLO-247743, IA - 33839, ID - MLO-2080247743, IL - 031.0054184, WI - 247743, WV - LO-247743, WY - 8203, IN - 41478, KS - LO.0039219, KY - MC717200, LA - Licensed, MA - MLO247743, MD - 247743, ME - Licensed, MI - 247743, MN - MN-MLO-247743, MO - MO-247743
Book Your Mortgage Consultation Now
Ready to take the next step towards your dream home? Book a consultation with Jennifer Beeston today!
Whether you're a first-time buyer or looking to refinance, Jennifer is here to guide you through the process with ease and clarity.
