Watch Out for Those Online Mortgage Teaser Rates! You Have to Read the Fine Print!

FULL TRANSCRIPT:

So, I get this email from a client of mine who’s looking to refinance, and he sends me this ad he saw online. He takes a screenshot of it and emails to me, and he is like, “Jesse, why can’t I get this rate? These rates are fantastic. They’re better than the rates you just quoted me.” So, I took a look at the ad, and they were great rates. And I was trying to figure out how these lenders could get these rates. Because my rates are pretty good. My rates are very good. And these guys were undercutting me. So, what I did was I looked at the fine print, and I realized what they were doing. So, let’s take a look. Let’s take a look at these teaser rates that we see online and see sometimes just not what they seem.

So, let’s take a look, see if I can get on here. So, here’s the ad. A couple of the lenders who have pretty low rates, and 2.994 for 1.75, that Quicken, those rates aren’t any good. But 2.625 with no points, and 2.875 with no points, those are pretty good. 2.25 with no points, and 2.625 with no points, those are pretty good rates. But let’s look at the fine print. That’s where we’re going to find out how they’re doing this. So, I’m going to see if I can make this bigger and look at the fine print. So, each of these, the fine print is pretty much same. Let’s look at the good rates. It’s a $400,000 loan amount, 720 plus FICO score loan amount, loan to value is 80%. Rates as of 9:30 Pacific Daylight Time on November 7th, 2020, November 7th, 2020.

Now, I got this ad for my client in April of 2021. These ads, these quotes here that we, see 2.25 for a 15-year and 2.625 for a 30 year, these rates were quoted 5 months ago, and the later part of 2020. Now, the later part of 2020 were fantastic rates. I could beat these rates in the later part of 2020. Can’t beat them really right now. It would take me a little bit to beat these rates. But in 2020, November 2020, I could actually beat these rates and do it easily.

So, sometimes you have to look at the fine print with these things. What you see online is not what you always get. Remember, always look for points. 1.75 points over here. When you see the APR is more than a half point more than the interest rate, that means there’s points added in. Sometimes they didn’t put this 1.75. Legally, we only have to put the APR. So, make sure that this number, the rate and the APR are close together. If they’re not, there’s something else going on. It’s not always bad, but you have to look closer.

So, how can they get away with this? That’s the question. We are such a highly regulated industry, finance, mortgage lending. And this is just plain, I think it’s unethical, for one thing. I think it’s illegal. So, how do they get away with it? How are they doing this? Well, the quick answer is the last administration really gutted our regulatory industry, our regulatory agency, the CFPB. So, they really didn’t have the manpower to go after these people. So, for the last few years, a lot of these lenders were just putting up stuff that really weren’t real. We call them teaser rates. These weren’t real rates. And they were getting away with it, because the regulatory agency just didn’t have any the amount of manpower to go after them.

Things are changing. The new agency as a 2021, we see the new administration as of 2021, the federal government has changed. And the Democrats are in power now, whether that’s good or bad, that’s up to you to decide, but CFPB is back in power. So, this isn’t going to last long. So, the moral is you just have to look closer. When you’re quoting rates from when interest rates were the best in in history but they’re not anymore, 5 months later, you’re still running this ad, come on. So, just be aware. Make sure when you’re looking at online ads, make sure that you look at them closely. Make sure you’re looking at fine prints. Sometimes the fine prints don’t even there. Sometimes it’s hidden. Sometimes you have to click through several places to find that fine print. And I think that’s illegal too. But they were getting away with it. So, make sure you look at the fine print. If you have any questions just ask me. Even if I’m not going to do the loan, I’ll look at it. And I’ll try and tell you if it’s a good rate or not. I really will. And I may be able to beat it, I may not.

Now, a lot of these companies, there’s some bad companies like these guys who are being disingenuous, but there’s some good companies. There are these that effect smoking interest rate. When it comes to the price, a lot of these companies that have very, very low rates, the people who do them, the loan officers, I mean, they’re just kind of order takers. They don’t have a lot of experience. They’re very new. They’re not experts in the field. And lending can be pretty difficult sometimes. So, it’s a give and take. If you want the very, very, very lowest interest rate, it comes to the price. It comes with a rookie loan officer. It comes with a company that will take forever. I mean, refinances I’ve done, and I’ve saved refinances. People who have come to me and said, “This company X, they had great rates, I went with them. But it’s been 3 months and they’re still stalling. Can you save me? I would just want to do a refi,” and I can do it in 3 weeks it’s not a big deal. So, comes with a price.

Make sure you know what you get into. I’m happy to look at it. I’m happy to give you a quote for refinances. I have great rates. Even for purchases, I have great rates. So, give me a chance, but make sure when you look at these online rates that you know what you’re getting into. If you have any questions, give me a call. My name is Jesse Rivera. I’m a mortgage broker. My number is 562-576-6885, okay? Thanks a bunch.