{"id":21838,"date":"2025-10-10T14:21:02","date_gmt":"2025-10-10T14:21:02","guid":{"rendered":"https:\/\/incredipros.com\/?p=21838"},"modified":"2025-10-10T14:21:04","modified_gmt":"2025-10-10T14:21:04","slug":"3-traps-the-mortgage-industry-doesnt-want-you-to-know-about-and-how-to-avoid-them","status":"publish","type":"post","link":"https:\/\/incredipros.com\/?p=21838","title":{"rendered":"3 Traps The Mortgage Industry Doesn’t Want You to Know About \u2014 And How to Avoid Them"},"content":{"rendered":"
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Buying a home is an exhilarating and exhausting process, one that tests the wits and resolve of even experienced buyers. And some of the very people you turn to for guidance might not always have your best interests in mind. <\/p>\n

Some of the industry\u2019s sales tactics can make it unnecessarily difficult for you to shop around, or to claim down payment assistance packages designed to encourage homeownership.<\/p>\n

To be clear, today\u2019s mortgage market is a kiddie pool compared to the shark-infested waters of 20 years ago. The Great Recession led to a flurry of regulations that cracked down on the abusive home lending industry practices that created the mortgage meltdown of 2008 and the foreclosure crisis that dragged on for years after that.<\/p>\n

Even so, borrowers can misstep and cost themselves money, and you can\u2019t always count on others to look out for your best interests. As you wade into the market for a mortgage, here are three potential traps you should know how to avoid.<\/p>\n

Mortgage trap: That long, amiable conversation with a loan officer is designed to keep you from shopping around<\/h2>\n

As mortgage volumes have slowed in recent years, some major lenders have adopted a new strategy: They draw you into an involved discussion with a friendly loan officer who keeps you on the phone for an extended period. The chat serves to build rapport, but also makes you feel as if comparison shopping is just too time-consuming.<\/p>\n

\u201cThey definitely want to make that conversation long, drawn out. \u2018What kind of pets do you have? What are your kids\u2019 names?\u2019\u201d says Shawn Malkou, managing broker at X2 Mortgage, a mortgage brokerage in Chandler, Ariz. <\/p>\n

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If that takes 30 minutes to an hour, that person is going to get off the phone and say, \u2018Wow, I don\u2019t want to spend another hour on the phone talking about mortgages.\u2019<\/p>\n

\u2014 Shawn Malkou<\/cite>
\n Managing broker, X2 Mortgage<\/span>\n <\/p><\/blockquote>\n

In one case, Malkou spoke to a borrower who had locked in a mortgage offer with a rate half a point higher and closing costs that were $5,000 more than the competing offer Malkou could secure.<\/p>\n

\u201cWhen I said that, the client said, \u2018It\u2019s not that big of a deal,\u2019\u201d Malkou says. \u201cThat\u2019s a massive difference. But there was still a lot of pushback from the homeowner about not wanting to redo that process. Most borrowers go with the first lender they talk to.\u201d<\/p>\n

Short-circuiting the shopping process is all too common, says Scott Harris, founder of Magnetic Real Estate in New York City and author of The Pursuit of Home: A Real Estate Guide to Achieving the American Dream.<\/p>\n

\u201cThe reason people don\u2019t [mortgage comparison shop] is because it\u2019s so painful,\u201d he says. \u201cThe pain of going through the mortgage process is real. People just say, \u2018OK, this is a good-enough rate.\u2019\u201d<\/p>\n

Benjamin Schieken, founder of mortgage shopping site Fincast, says the long conversations are an example of big lenders using consumer psychology in their favor.<\/p>\n

\u201cIt\u2019s smart business, it\u2019s just not good for consumers,\u201d he says. \u201cYou just need to provide six specific pieces of information to get a mortgage. You could make that conversation last less than 30 seconds. But consumers don\u2019t know that.\u201d<\/p>\n

Part of the impetus behind the long conversations is for the loan officer to create camaraderie and persuade the borrower that the relationship outweighs any potential savings.<\/p>\n

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Building that rapport is a huge opportunity for a lender. But this isn\u2019t a relationship. This is a financial transaction. Let\u2019s treat it as such. Otherwise, you will end up overpaying.<\/p>\n

\u2014 Benjamin Schieken<\/cite>
\n Founder, Fincast<\/span>\n <\/p><\/blockquote>\n

Avoid the trap<\/h3>\n

Carve out time to shop for a mortgage.<\/strong> While you might feel locked in after a long phone conversation, you\u2019re still free to look for a better offer.<\/p>\n

Get at least three offers from lenders.<\/strong> You should compare not just rates but also lender fees. You can try different types of lenders, such as a big bank and a credit union, and you might check with a mortgage broker, who can shop offers from various lenders. Bankrate can also help you shop around.<\/p>\n

Be prepared for what\u2019s actually required.<\/strong> A mortgage application requires six pieces of information: the borrower\u2019s name, income and Social Security number, the property address, the purchase price and the loan amount. If the loan officer wants to carry on a longer conversation than that, feel free to politely let them know you need the call to move along \u2014 but with the knowledge that the person on the other end of the line probably has more practice at this conversation than you do.<\/p>\n

All of this requires some time and hassle. Mortgage rates vary based on a number of factors, including your credit score, your debt-to-income ratio and your loan-to-value ratio, so you\u2019ll have to provide some details to lenders. The upside: If you find a better deal, you might save thousands of dollars over the life of the loan.<\/p>\n

Mortgage trap: The loan officer or mortgage broker tells you down payment assistance programs aren\u2019t worth the hassle<\/h2>\n

Home prices remain at record levels, and that has created an affordability squeeze, especially for first-time homebuyers<\/u>. There is a workaround, though: Down payment assistance<\/u> programs, which are offered by every state as a way to encourage homeownership. Combine state programs with federal and local initiatives, and more than 2,200 down payment programs are active nationally, says Rob Chrane, CEO of Down Payment Resource, a company that tracks homebuyer assistance initiatives.<\/p>\n

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\n Down payment assistance programs 101
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