Tancrede de Pola (OP Columnist)
IN the real world, most people learn by their mistakes. But when it comes to picking a mortgage, you may only get one shot as it is virtually impossible to reverse a decision that goes against you!
That is why it is essential not to make the wrong decision when choosing the right mortgage provider for you.
But fear not that is what mortgage brokers are for!
And while it may make sense to go to the experts for advice, there will always be those who think they know better and will still go it alone regardless… Good luck to them (they are going to need it).
There are many hurdles that can trip you up when looking for a mortgage. Here are five of the most common mistakes made by buyers without a broker:
1) Hold the phone
When going it alone the internet is the place that most people start. From there they head to the telephone. Both bad decisions. Choosing a loan provider based on a telephone conversation or internet search is more likely to reveal the biggest liar rather than the best quote. In order to weed out the snakes, buyers need to understand the difference between posted prices and quoted prices. Posted prices are those that lenders distribute to their loan officers and place on their website and on other websites. The posted price is the price the lender would lock to a qualified borrower whose application has been fully processed. However, on the phone or via internet searches, buyers are more likely to come across quoted prices: usually a low price communicated to the buyers in order to rope them in and move the process along until it is too late and the real price has skyrocketed. Long story short: the best deal is not online or over the phone! Beware catchy advertising
2) Flashy ads are a no go
If a mortgage lender is splashing big bucks on advertising, it means one of two things: The company is hugely successful and can afford to do so with no affect to its customers. Or – and much more common – its prices are going to higher than its competitors to pay for the cost of mass advertising. Long story short, a buyer is more likely to find a good lender by picking a page in the yellow pages than they are by responding to an advert.
3)Tomorrow never comes
When shopping around it is important to remember that a quote from Bank A on Monday cannot be compared to Bank B on Tuesday. In other words, unless a buyer receives a quote from all lenders on the same day then they a probably wasting their time. One of the values of a broker is the ability to approach multiple lenders at the same point in time to compare relevant prices.
4) Agreeing to incomplete T’s & C’s
Each loan agreement has many sub sections that must be ironed out before a complete quote can be formalised. However, lenders will offer buyers the opportunity to sign on the dotted line of a partially completed quote. This leaves the buyer vulnerable to hidden costs or rate increases at a later date. The crux of the point: don’t deal with lenders whose price quotes are incomplete.
5) Too quick to be true
When searching for a loan, a lender will need access to accurate information about the buyer e.g. annual income, credit score etc. If a lender is offering a quote before obtaining this information then alarm bells should be ringing! Like many things – especially in Spain – working out a loan takes time, and in this case there is good reason for it.
The moral of the story: A simple way to avoid making these mistakes is to use a mortgage broker!
