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How loan officers TRICK YOU (and how to prevent it) - YouTube
Channel: Win The House You Love
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the last thing you want is for a loan
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officer to tell you that buying a home
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is going to cost
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this much and then they say wow things
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have changed
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and it's actually going to cost this
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much and then
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a few days later well things have
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changed again and now
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it's this much and you're sitting there
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thinking where in the world did all
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these increases come from and do we even
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have the money
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to be able to pay for this in this trick
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that loan officers do
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is so compelling that i've lost clients
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because of it so
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here it is loan officers know that most
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people like you
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are shopping their loans to find the
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best rates and the best
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costs so to win your business so many
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loan officers will
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only quote certain costs that they're
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required to tell you
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when they show you how much it will be
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uh or how much it will cost
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to buy a home and i'll cover more on
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what these two tricks are
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but a perfect example of this is i was
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talking to one of you
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someone who was watching one of my
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youtube videos um and they reached out
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to another loan officer on youtube and
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i'm not gonna name any names here
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but yes he said hey uh they gave me a
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quote
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but all they did was send me an email
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with a rate in it
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and nothing else and is this normal like
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it was just hey this here's your rate
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let me know when you find home
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and we look forward to helping you and i
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was talking with them like how can you
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make an informed decision
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about a loan with such little detail and
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the simple answer is
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you can't if you just have a rate if you
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don't have all of the other information
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about
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a loan then you can't find what's going
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to be the best option for you
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and likely there's kind of a trick that
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might be happening in here
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where a loan officer is trying to get
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your business this way and not being
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able to make the choice on which loan is
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the cheapest option for you can cost you
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thousands if not tens of thousands of
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dollars over the period of the time that
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you're in the home and you have
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that loan so here are the two main
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tricks to watch out for when you are
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talking with a loan officer so number
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one is
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hiding your true closing costs so when
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you get pre-approved
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by a loan officer they likely will give
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you a quote showing you how much it will
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cost to buy
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a home things like your down payment
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your closing costs
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everything that would include like
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appraisal fees taxes
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title costs homeowner's insurance
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however your loan officer and lender
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don't charge all of those costs a lot of
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people think that the lender is one
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charging all these fees
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and they're really not they're giving
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you estimates of those fees and lenders
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can only control what are called section
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a fees
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section a fees are also known as
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origination charges or origination
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fees um and they're the only fees that
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can be charged by a lender so these are
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things like an underwriting fee
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administration fee
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it's section a page two in the top left
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of a loan estimate
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and they're not allowed to increase
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after quoted on a loan estimate so if a
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lender gives you
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a loan estimate that details what their
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section 8 costs are let's say it's a
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thousand dollars
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they can't come to the closing table and
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then say it's well it's actually two
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thousand dollars
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now they have to honor that quote or let
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it be
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lower but the issue here is that a loan
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quote
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isn't binding whereas a loan estimate is
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a loan estimate is an actual
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legal document regulated by the cfpb
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where a loan quote
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isn't so what's frustrating is most of
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the time you can't get a loan estimate
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until you're actually under contract for
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a home
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so you have to hope that the quote that
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you get from a loan officer when you're
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pre-approved
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is actually accurate so what ends up
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happening
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is you ask the lender how much is it
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going to cost in closing costs
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and the lender not telling the full
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story to you only quotes you what they
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charge they only quote you the section a
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fee and not all of the other closing
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costs
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that are happening in a deal section a
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fee are only a portion only a sliver of
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what the closing costs are
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the rest of the closing costs not
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charged by the lender again are things
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like the appraisal
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title charges recording fees taxes
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homeowners insurance
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even though the lender doesn't charge
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these things they need to be able to
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estimate those
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to you so you can get a full picture of
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what's going on when you're actually
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buying a home
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now it might seem innocent maybe to some
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but
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it's entirely unfair for loan officers
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to expect most people understand
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how all closing costs work together
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especially in comparison to what a
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lender charges and what all the other
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estimated
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third-party charges are in closing costs
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and they hide behind this idea uh that
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they're going to show you
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their numbers and not helping you
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understand the total costs of buying
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um a home almost putting the burden on
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you so it's like they sit back and like
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well you should have known all these
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other costs it's just
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entirely unfair um and and there's a
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lender in
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my area that does this all the time so
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all their advertising advertisements say
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our closing costs are only 4.99 and
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everyone around here goes crazy because
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they're like it's only 4.99 over here
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with this lender
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um and so what's frustrating is when i
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would give a close quote to clients
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i would show them the whole picture
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right you have these are what your
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estimated taxes are going to be this is
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where your insurance is going to be
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recording
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fees appraisal title fees uh none of
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which are charged by
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us as the lender and those fees will add
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up to several thousand dollars right
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just in taxes you're probably going to
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be paying
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a few thousand dollars um put into an
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escrow account you're gonna pay a year
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of homeowners insurance upfront
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title costs are gonna run you probably
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at least a thousand dollars uh and so
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what ends up happening is people would
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compare
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that uh like this several thousand
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dollars of third-party costs not charged
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by us the lender
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but then compare it to 4.99 because one
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other lender that's what they charge in
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their section 8 costs
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but they're not telling you the full
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story and it's so frustrating when i'm
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helping a client understand
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their total cost and they say well this
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lender over here they're only charging
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4.99
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and you're charging thousands so we're
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gonna go with them
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only to realize far too late in the
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process that the lender
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hid most of the other closing costs and
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then blamed the client for not knowing
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how closing costs work
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it's so backwards and far too many
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lenders
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only show you their fees because they
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want you to think their costs are super
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low compared to the full quote
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from other lenders so if your loan
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officer isn't showing you
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all the estimated fees even the ones
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they don't charge they likely don't have
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your best interest in mind
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it's dumb and dishonest and i'll show
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you how to protect yourself from it
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but before that one other trick that
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loan officers can do is by artificially
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lowering your monthly payment
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on pre-approval quotes so kind of hiding
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quotes in two different ways
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the down payment closing costs like we
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just talked about and also
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artificially lowering your monthly
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payment uh there's a prominent lender
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out there that works with a lot of
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veterans i'm not going to say their name
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but for some reason their software i
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believe it got updated
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but it wouldn't show fully accurate
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monthly payments to people when they
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were giving quotes
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see a monthly payment quote should
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include your principal
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your interest your mortgage insurance
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your homeowner's insurance your property
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taxes
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and homeowners association fees as well
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that should all be included
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in your monthly payment because it's all
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something that you're going to have to
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pay
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right so why not show the full thing
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even if it's a quote
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right things like taxes a lender has to
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estimate um
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they can't just leave it out because
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they don't know and i don't know if they
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just had bad software or what
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but it would never include the escrow
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payments those things like taxes and
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homeowners insurance
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um so they were always left out like can
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you imagine like a lender quoting you a
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thousand dollars is a monthly payment
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they say hey it's only gonna cost you a
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thousand dollars a month
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uh to have a mortgage for this home but
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then you get your first mortgage payment
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it's actually
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seventeen hundred dollars per month
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because of the extra escrow that wasn't
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included in that thousand dollars
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you start to feel a little cheated and
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more sneakily than leaving off
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escrows uh or loan officers who kind of
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drastically under quote a client um this
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happens often with online lenders who
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aren't familiar with a location
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or they can't be bothered to do the 60
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seconds of research it takes to figure
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out like the local cost of where a
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client is at
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so for instance like taxes on a home
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around here in dayton ohio
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uh are about 4 500 per year
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on a 330 000 home it's not difficult
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to look up find the area someone's
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looking in and look at what average
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taxes are around that area
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but so many times i've seen quotes from
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other lenders where the loan officer
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said
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taxes are only two thousand dollars a
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year um and the client will go with that
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lender because they think that their
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costs are lower
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like no it's just the loan officer not
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giving you
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a quote that says accurate and
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considerate as possible
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because a lender cannot control taxes it
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doesn't matter what they quote you
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the county will determine your taxes so
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just because a quote is low
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doesn't mean that it will actually be
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that cheap when the time comes
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to write the check okay so how do you
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avoid getting tricked knowing the tricks
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is half of the battle
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the other half is understanding exactly
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what you need um
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to do as a borrower to make the right
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decision so far far too many clients
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choose the wrong lender and then realize
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the cost got switched on them
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when they went under contract and a lot
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of people feel like it's too late just
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just know that it's not too late at that
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point to switch if you need to
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but how do we avoid even getting to that
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point in
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the first place so really one of the
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best ways
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to avoid getting tricked um is when
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you're comparing
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lenders so first of all you do need to
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be looking at different lenders
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you can't just look at one and then say
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that works for me and move forward with
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it
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ideally you want to be looking at at
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least three lenders and
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only decide on the lender using
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the section a costs right
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we want to see the other estimated fees
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i want to see what an estimate of taxes
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and insurance and everything looks like
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so i can see the full picture
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but i don't want to choose different
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lenders i don't want to go with lender a
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just because they had lower taxes than
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lender b because the taxes are going to
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be the exact same
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no matter the home i choose the only
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thing that's going to be
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different between these lenders are the
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section a costs and the rates and
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mortgage insurance that they have
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as well so i only want to be looking at
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those and you can ask a lender what are
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your section a costs what are your
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origination costs
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those are the only things i need to know
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when choosing the lender it doesn't
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matter with a
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quote for insurance because insurance is
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something that you're going to shop for
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on your own also
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compare the monthly payment um
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with your own independent research so
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they're likely going to give you a
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monthly payment they're going to
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estimate
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taxes and insurance um i have a tool for
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you you can text my number
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937-358-6542 text
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payment to it and it will send you this
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free calculator where you can go and
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actually
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compare homes side by side look at the
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monthly payment as well
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and it will give you some averages of
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taxes you can put in there
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you can also go look up things on
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something like zillow and put in taxes
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in there too
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to get an estimate of your monthly
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payment and compare that
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and then finally ask your loan officer
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for full breakdown
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including you definitely want to have uh
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your rate in there you also want to have
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all estimated
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costs okay
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everything from uh insurance to taxes
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recording fees title appraisal
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all that needs to be included in there
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even if it's estimated even if it's not
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charged
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exactly by the lender and i also want a
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full monthly
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breakdown okay
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so in the full monthly breakdown i
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should be seeing principal interest
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mortgage insurance property taxes
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homeowners uh homeowners insurance
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and homeowners association fees if
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you're looking in an area that has
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homeowners association fees you should
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be seeing
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all of that from your lender and not
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just an email with a rate or not just
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a quote over the phone i want to see a
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full breakdown
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of all of those things now not every
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loan officer is bad enough to trick you
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but you do need to be aware of how you
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can protect yourself as much as possible
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and choose the best lender for you which
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is exactly why i made this video
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on choosing the best lender who will
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guide you through the process and help
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you save
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the most money choosing the cheapest
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loan option
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