Palm Beach Real Estate and Loans

Yesterday I started asking people the following: Do You Know What Kind of Mortgage that you currently have?

Quite a few Palm Beach real estate owners would say "Sure!" without hesitation.

However......

I would tell EVERYONE to double-check your paperwork before you get a surprise.

After several years in the business, I've lost track of the number of people that have come to me to refinance their home loans because they were shocked that 'all of a sudden' their monthly mortgage payment increased.

The majority of the time the person was scammed, tricked or just flat-out lied to.  It's disgusting, but Mortgage Brokers and Lenders have a rotten reputation for a reason.  (I do believe that the majority of the people in the business ARE ethical - it's just that the ones that are bad are SO BAD that they wreck the whole industry's reputation.)

I'm talking about the 'salesmen' who could sell you an air conditioner, in Alaska, in the dead of winter.

There are a bunch of ways this can happen- typically they'll show you that they can get you a much lower rate (and payment) then their competitor.....  The trick lies in the fact that they are showing you a rate on an adjustable-rate mortgage and comparing it to a 30 year fixed rate loan.  Too often the customer sees nothing but the RATE and falls for the trick.

Another 'trick' primarily happens with purchase money mortgages.  The Client is at closing.  They're thrilled that they finally are going to own a home.  Then they notice that something changed..  That isn't the loan that they were promised!  If it was a refinance, they could just get up from the table, throw a few choice words at the Mortgage Broker (if he even bothered to show up!) and leave - no problem.  However, with a purchase, the closing HAS to happen.  Unless you are dealing with an extremely understanding seller, you have to close then and there or you will lose the home and any deposit money you'd put down.

Basically the examples I've given demonstrate how a Borrower can be tricked into getting an ARM when they thought they were getting a fixed-rate loan.

Don't get me wrong - there is nothing wrong with an ARM at all.  If that is what you want and you understand how they work -

Tomorrow I'll go over exactly how the adjustments can take place.

Related Posts