Latest news with #WillBegeny
Yahoo
10-05-2025
- Business
- Yahoo
7 Key Signs Your Mortgage Lender Is Ripping You Off
You could wind up paying more than you need to for a mortgage thanks to all-too-common predatory lending practices. A new report from Tomo Mortgage — which recently launched TrueRate, a free AI-powered tool that shows the real cost of mortgages — found that inflated rates, hidden fees and misleading pricing will cost U.S. homebuyers $11 billion in 2025. Be Aware: Read Next: To ensure you're getting the best possible terms for your home loan, keep an eye out for these key signs that your mortgage lender is ripping you off. Some lenders will use 'point traps' to get you to pay more than you need to for your home loan. 'Point traps are a deceptive tactic where lenders advertise seemingly low interest rates but require borrowers to pay exorbitant upfront fees, known as discount points, to obtain that rate,' said Will Begeny, VP of TrueRate, Tomo Mortgage. 'The 'trap' springs when borrowers, often first-time homebuyers or those under time pressure, focus solely on the attractive interest rate without fully understanding or calculating the significant added cost of these points.' To avoid point traps, it's important to be an educated consumer. 'Signs that a lender is deceiving you with point traps can vary, but the most common ones are extremely low advertised rates, or vague language like 'as low as,' which is a phrase often used to mask the fact that the lowest advertised rate is only achievable by paying a huge number of points,' Begeny said. 'Borrowers should also look out for a large discrepancy between the interest rate and the APR, or high loan origination fees.' Explore More: Some lenders won't give you the full picture of the price you'll have to pay for a loan until you get to closing. ''Sleight-of-estimates' refers to the tactic some lenders use to make their loan offer appear more attractive by underestimating certain closing costs on the loan estimate,' Begeny said. 'This misdirection focuses the borrower's attention on a seemingly lower estimated cash to close figure, while the lender's own fees in the origination charges section might be higher. 'The borrower only realizes the true cost at the closing table, by which point it's often too late to switch lenders without significant delays and potential additional costs,' he continued. 'Lenders consistently use this type of complex jargon to hide the real costs of a mortgage, leaving many borrowers feeling overwhelmed and cautious to apply.' To avoid falling victim to sleight-of-estimates, get loan estimates from multiple lenders at the same day and time. Mortgage loans often do come with fees that are legitimate and cover needed services, but some lenders will try to pass off additional unnecessary fees as being 'standard.' 'Borrowers should be particularly cautious of fees that are vaguely described or seem duplicative,' Begeny said. 'Some 'standard' fees that borrowers should keep an eye out for are any administrative, processing, underwriting or document preparation fees listed as separate charges. These fees often overlap and can be bundled into a single, more reasonable origination fee. Lenders might itemize these fees to make the total cost seem less daunting, but they essentially cover the lender's operational costs. 'Other lenders may even charge a 'satisfaction fee,' which is an unusual and unwarranted fee for the lender simply doing their job,' he continued. 'The key is to question every fee and understand its purpose. A transparent lender should be able to justify all charges.' If a lender offers you 'free refinancing,' this doesn't automatically mean the loan is a good deal. 'Some lenders lure borrowers in with the promise of a 'free refinance' if interest rates drop. However, the costs are often hidden in a higher initial interest rate or inflated fees during the refinance process itself,' Begeny said. 'Borrowers should focus on getting the best possible rate and terms upfront rather than relying on a potentially costly future refinance.' 'Some lenders may try to discourage borrowers from getting quotes from other lenders by claiming their offer is the absolute best or by creating a sense of urgency,' Begeny said. Never take a lender for their word — do your own research using online comparison tools or calling around for available loan terms. A mortgage lender may try to get your business by flaunting attractive-seeming terms, without actually disclosing the total cost of the loan. 'Some less scrupulous lenders may delay providing a loan estimate, hoping to keep the borrower engaged until they are too far into the process to easily switch,' Begeny said. 'Borrowers should insist on receiving a loan estimate as early as possible in the process, and even then, they should still shop around.' Taking out a home loan can be a daunting process, but you should know exactly what you are agreeing to before signing on the dotted line. 'The mortgage industry is rife with complex terminology,' Begeny said. 'Some lenders intentionally use jargon and confusing calculations to obscure the true cost of the loan. Borrowers should arm themselves with knowledge, ask for clear explanations in plain language and not hesitate to seek independent advice if needed.' More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early How Far $750K Plus Social Security Goes in Retirement in Every US Region 12 SUVs With the Most Reliable Engines Source Tomo Mortgage This article originally appeared on 7 Key Signs Your Mortgage Lender Is Ripping You Off Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
10-05-2025
- Business
- Yahoo
7 Key Signs Your Mortgage Lender Is Ripping You Off
You could wind up paying more than you need to for a mortgage thanks to all-too-common predatory lending practices. A new report from Tomo Mortgage — which recently launched TrueRate, a free AI-powered tool that shows the real cost of mortgages — found that inflated rates, hidden fees and misleading pricing will cost U.S. homebuyers $11 billion in 2025. Be Aware: Read Next: To ensure you're getting the best possible terms for your home loan, keep an eye out for these key signs that your mortgage lender is ripping you off. Some lenders will use 'point traps' to get you to pay more than you need to for your home loan. 'Point traps are a deceptive tactic where lenders advertise seemingly low interest rates but require borrowers to pay exorbitant upfront fees, known as discount points, to obtain that rate,' said Will Begeny, VP of TrueRate, Tomo Mortgage. 'The 'trap' springs when borrowers, often first-time homebuyers or those under time pressure, focus solely on the attractive interest rate without fully understanding or calculating the significant added cost of these points.' To avoid point traps, it's important to be an educated consumer. 'Signs that a lender is deceiving you with point traps can vary, but the most common ones are extremely low advertised rates, or vague language like 'as low as,' which is a phrase often used to mask the fact that the lowest advertised rate is only achievable by paying a huge number of points,' Begeny said. 'Borrowers should also look out for a large discrepancy between the interest rate and the APR, or high loan origination fees.' Explore More: Some lenders won't give you the full picture of the price you'll have to pay for a loan until you get to closing. ''Sleight-of-estimates' refers to the tactic some lenders use to make their loan offer appear more attractive by underestimating certain closing costs on the loan estimate,' Begeny said. 'This misdirection focuses the borrower's attention on a seemingly lower estimated cash to close figure, while the lender's own fees in the origination charges section might be higher. 'The borrower only realizes the true cost at the closing table, by which point it's often too late to switch lenders without significant delays and potential additional costs,' he continued. 'Lenders consistently use this type of complex jargon to hide the real costs of a mortgage, leaving many borrowers feeling overwhelmed and cautious to apply.' To avoid falling victim to sleight-of-estimates, get loan estimates from multiple lenders at the same day and time. Mortgage loans often do come with fees that are legitimate and cover needed services, but some lenders will try to pass off additional unnecessary fees as being 'standard.' 'Borrowers should be particularly cautious of fees that are vaguely described or seem duplicative,' Begeny said. 'Some 'standard' fees that borrowers should keep an eye out for are any administrative, processing, underwriting or document preparation fees listed as separate charges. These fees often overlap and can be bundled into a single, more reasonable origination fee. Lenders might itemize these fees to make the total cost seem less daunting, but they essentially cover the lender's operational costs. 'Other lenders may even charge a 'satisfaction fee,' which is an unusual and unwarranted fee for the lender simply doing their job,' he continued. 'The key is to question every fee and understand its purpose. A transparent lender should be able to justify all charges.' If a lender offers you 'free refinancing,' this doesn't automatically mean the loan is a good deal. 'Some lenders lure borrowers in with the promise of a 'free refinance' if interest rates drop. However, the costs are often hidden in a higher initial interest rate or inflated fees during the refinance process itself,' Begeny said. 'Borrowers should focus on getting the best possible rate and terms upfront rather than relying on a potentially costly future refinance.' 'Some lenders may try to discourage borrowers from getting quotes from other lenders by claiming their offer is the absolute best or by creating a sense of urgency,' Begeny said. Never take a lender for their word — do your own research using online comparison tools or calling around for available loan terms. A mortgage lender may try to get your business by flaunting attractive-seeming terms, without actually disclosing the total cost of the loan. 'Some less scrupulous lenders may delay providing a loan estimate, hoping to keep the borrower engaged until they are too far into the process to easily switch,' Begeny said. 'Borrowers should insist on receiving a loan estimate as early as possible in the process, and even then, they should still shop around.' Taking out a home loan can be a daunting process, but you should know exactly what you are agreeing to before signing on the dotted line. 'The mortgage industry is rife with complex terminology,' Begeny said. 'Some lenders intentionally use jargon and confusing calculations to obscure the true cost of the loan. Borrowers should arm themselves with knowledge, ask for clear explanations in plain language and not hesitate to seek independent advice if needed.' More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early How Far $750K Plus Social Security Goes in Retirement in Every US Region 12 SUVs With the Most Reliable Engines Source Tomo Mortgage This article originally appeared on 7 Key Signs Your Mortgage Lender Is Ripping You Off
Axios
02-05-2025
- Business
- Axios
Mortgage rates get more treacherous
Amid all the talk of what's happening to mortgage rates, it's often easy to lose sight of the fact that rates vary widely between lenders on any given day. That gap has grown significantly over the past couple years. Why it matters: It's not easy to work out how attractive a mortgage rate is. Two offers from two different companies might have different headline rates, but might also vary on everything from origination fees and closing costs to the amount of money it costs to "buy points" and lower the interest rate paid. That makes apples-to-apples comparisons extremely difficult. Follow the money: Americans will collectively pay $11 billion more than they needed to on their mortgages this year, per new research from Tomo Mortgage. Tomo studied about 1 million loans from more than 1,000 different lenders and normalized each one for rate points, credit, purchase price, and down payment. The difference between the best and worst rates offered on any given day worked out to $287 per month in mortgage payments on a home that sold for the median sale price. Between the lines: The gap between the best and worst rates was regularly as low as 0.5 percentage points between 2018 and 2021, but then the Federal Reserve started hiking rates in 2022. These rate hikes sent mortgage rates soaring, which in turn pushed refinance activity close to zero, a major hit to the profitability of the mortgage sector. Some lenders responded by offering aggressive rates, Will Begeny from Tomo says, while others found themselves needing to pad their margins. As a result, the gap between the best and worst rates rose to more than 2 percentage points on some days in the fall of 2022. (It's now closer to 0.88 percentage points.) Where it stands: Mortgage rates are still high in absolute terms, refinancing activity is low, and the difference between a good rate and a bad rate is much bigger than normal.
