If you’re in the process of refinancing your mortgage online, (probably why you’re reading this today) there is one mistake that will cost you more money and give you more headaches than any other. What is this horrific mistake? The overwhelming majority of homeowners glaze over when it comes to legal agreements, terms and conditions, and disclosure statements. If you neglect to read these statements, even when doing something as simple as requesting information, you could wind paying too much for your new mortgage.
Here is a case study to illustrate my point.
Ted is a savvy guy. He’s been online for at least ten years now, graduated from college, has a good paying job, wife, two kids and a dog. He was recently promoted at the box company to supervisor position with a good pay raise. He figures the higher income would allow him to qualify for a lower mortgage interest rate, and decides to refinance his mortgage.
Because Ted’s been online for a while now he’s comfortable doing his banking online and decides the Internet would be a great way to find a new mortgage loan. He’s seen those commercials on TV about making different lenders compete for his business, and decides to check out the mega lending website to get a quote. Ted fires up his computer, visits the mega get lenders to compete website, and fills out their contact form with his personal information. Ted has just made a colossal mistake.
What Ted didn’t do was read the Licenses & Disclosure statement found at the bottom of that mega mortgages compete website. Had Ted taken a minute to read this disclosure statement he would have found that the mega lenders compete website receives a fee of up to $1,300 for “arranging” his mortgage loan. Who pays this fee? Why, Ted of course!
The disclosure statement goes on to say that if he takes out his loan from one of the lenders in the mega mortgage website’s “network” this charge of up to $1,300 will appear on his Good Faith Estimate, which Ted will have to pay at closing. Because Ted filled out the form on the website, he’s overpaid for his new loan and doesn’t even know.
Ted may be a dead head for not reading; however, the risks of refinancing without reading terms and conditions are real. Always read the terms, conditions, and disclosure statements before entering any information requesting a quote on the Internet.