RE: Internet mortgage company using mortgage bait and switch, or not.
As a real estate agent I DO NOT LIKE when a borrower is using an internet mortgage company to process their loan. These big companies have no long term relationship with me and therefore have no reason to make my buyers their highest priority. My vendors, mortgage etc. treat my clients like they are their most important borrowers.
With that as a background I refer to the article heading Mortgage Bait & Switch Or Not? I am referring to a radio advertisement that has been running for quite a few days promoting that they have a program with the concept of locking your loan now and being able to pick a lower rate at some future date, providing that interest rates go down in the future. (All mortgage brokers have this option)
The pitch sounds great. The details not so great to most borrowers. The reason for the pitch is to get you to contact the advertiser.
My first days as a loan officer were for a large bank. They advertised a rate or program heavily. We were required to take the phone calls. It was not uncommon for the rate to have climbed by the time they published the quoted in the newspaper rate. However once I had them on the phone, gathered 15 minutes worth of information the consumer was so tired of the process that they stayed with us even if the rate or program had changed. In my history it took only a couple of experiences where I refused to take these calls.
I believe that is what the objective is for this new advertising program, which is to get you to contact them.
The pitfalls of locking now with a promise of a lower rate in the future is that you pay for this attractive program. You either pay with a higher rate or with fees. My experience in originating hundreds of loans is that the costs were not worth it. Another catch is the terms for the relock may be undesirable. You may have a specific period of time that you can exercise the re-lock or it may be available if you are about to close. I don’t remember one person finding this program one they wanted once they knew the facts.
The internet mortgage company running these ads do not care if you end up with the rate lock program. The reason is obvious to me, it is like a mortgage bait and switch, anything to get you to call.