4 Gimmicks to Watch Out for When Shopping for a Mortgage
Shopping for a mortgage can be a daunting task. You have banks, brokers, and other mortgage lenders to choose from. All claim to have certain advantages over others, whether it’s in the process or the rates. Here are 4 different examples of things to watch out for when you’re shopping for a mortgage.
The Bait and Switch
You see it all over the place: Mortgage brokers and banks advertising a great low rate, so low that it’s almost unbelievable.
You call in to find out about the rate, and maybe even put in your application. You have a chat with an agent, and go through all the hoops to secure that rate. One of two things happen at this point – You’re told you don’t qualify for that rate, or, the rate is for an extremely restrictive product that comes with huge payout penalties and other restrictions. You feel betrayed a little, as there was no indication in the original advertising about what you were applying for.
What do we suggest? Before putting in your application and going through the process, make sure to have a thorough chat with the mortgage company about the rate and product.
Ultimately, we all advertise our lowest rates. However, at Olympic Mortgage, we are super upfront about the mortgages we are selling. We make sure you know all the risks when you buy into a restrictive mortgage. Then, you can at least make an informed decision that you can feel comfortable with.
The 60 Second Pre-Approval
We see lots of companies and big banks advertising how easy and quick it is for you to get a preapproval. 60 seconds is all it takes! Let’s be honest here. Any 60 second preapproval is simply an online calculator taking the figures you input and spitting out a number that fits within the most restrictive guidelines. Do you really expect your pre-approval will be solid if its a computer program evaluating your details? Are you sure the bank will ultimately accept the income details you’ve input?
Take a look at the disclaimer on any of these calculators. They all ultimately claim that you cannot depend on the results, and you’re best to call them for a real pre-approval. So what’s the point of the 60 second preapproval? The point is for the mortgage company to draw you in and grab you as a client.
We admit it! We have a mortgage calculator for BC on our website too. We want to be able to provide similar tools as the rest of them, but at least we’re being upfront about it.
What do we suggest? Well, take any results from the 60 second preapproval with a grain of salt, and then call us, the professionals. We help you by actually talking with you and really getting to know your unique situation. Getting ALL the right details. Going in depth to figure out every curve and corner of your financial life. That way, we’re able to give you a REAL and solid prequalification you’re able to depend on.
You’re Just a Lead to Them
Websites like ratehub.ca and lowestrates.ca build their businesses on bringing in people with their content and great rates. Then, they pass you off to a mortgage company or bank that will contact you in the hopes of earning your mortgage business. That mortgage company pays the originating website for mortgage leads. You’ve just become a lead that was bought and sold.
We wouldn’t really say this is a gimmick, per say, but you have to understand that your contact information is being sold by one company to another company. You really don’t know what sort of Mortgage Brokerage or bank you might end up with. It could be anyone. You might have a great experience with a solid company, or, everything could go wrong. You didn’t choose who you were going to work with, you just went with a suggestion from another website. And here’s the kicker – because that mortgage broker in Vancouver had to spend money to get you in their door, it’s unlikely that they are going to actually want to give you a great deal on your mortgage. You’ll either get a bait and switch, or end up in a very restrictive mortgage product.
What do we suggest? Do your research, and make sure you’re dealing with a reputable mortgage brokerage that has a proven track record for doing things right. Look at the reviews, call the company and interview an agent. Once you’ve done some research, you’ll have a much better idea whether to proceed or not.
Giveaways and Cashback Offers
Sure, cashback is great. But you don’t want to choose your lender and rate based on the promise that you’ll be getting $1000 cashback. Normally, brokers who don’t have enough business or clientele try to lure in new clients by offering the cashback carrot. Do you really want to leave one of the most important financial decisions of your life in the hands of a mortgage broker who needed to bring you in with a cashback offer? Or would you rather deal with a reputable, experienced, and well reviewed mortgage broker who doesn’t need to use flimsy cashback offers to bring in clients? You decide.
At Olympic Mortgages, we deal with lots of lenders who offer cashback with their mortgages. But as your mortgage broker, we help you decide if the cashback offer is really worth it. We compare all the figures to help you make that decision – the interest rate, type of product, other fees, total amount borrowed, all play into the scenario. We evaluate the cashback offer with you, so you know you’re making the right decision.