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Right borrower /right lender

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Like the stock market, the mortgage market is fluid, and rates change daily. Unfortunately, today's paper is yesterday's news. Getting rates from one lender on one day and another lender the next day could show disparities that are a product of the marketplace rather than differences between the lenders.

Some lenders even advertise rates that are not real. You will often see such rates in internet ads and unsolicited e-mails. You're better off ignoring most ads. You should choose your lender, don't let them choose you. And be sure that you choose carefully. Many of the loan representatives that you are likely to talk with are not trustworthy. If given the chance, they will make choices that benefit themselves or their employer rather than you.

Part of the problem is that disclosure laws designed to protect consumers are not enforced. Take the Good Faith Estimate of Closing Costs that your lender is required to give you within 3 days of application. Let's say that you read yours and it says that the lender will make 1 point (1% of the loan amount) as a Loan Origination Fee and an additional $1,000 in other fees.

The form also discloses fees that are beyond the lender's direct control, such as settlement fee and title insurance fees, your first year home insurance premium, and County recording fees. You think it looks pretty good because the estimate is slightly lower than what you believe other lenders are charging, so you feel confident.

Guess what? The lender is not bound by that estimate. He can change it at will, deciding, perhaps, to charge you 2 points instead of one, doubling his income. When you finally see the loan documents at closing, you may find out that you are being cheated, but what can you do about it at that point?

Everyone expects you to close, and it's unlikely they will be sympathetic if you say, "I need another 30 days to get another loan."

You'll have to close and pay the extra fees. The bottom line is that when something like this happens, you were purposely misled from the beginning, kept in the dark through the process, and shielded from viewing documents until the last moment, at which point it's too late for you to do anything about it.

So how do you avoid this terrible situation? The answer is that you have to ask questions designed to tell you what kind of person and institution you are dealing with.

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