Don't FALL for fake mortgage programs
October 1, 2022
The limited time offer
For the fall season: "Limited Edition Pumpkin Spice Mortgage!" It smells like vanilla pumpkin hot cocoa with just a hint of apple pie, feels like the crisp crackle of the fireplace and looks like the picturesque color of changing leaves making a fall colored rainbow.
If fall is your favorite season, this will be your favorite mortgage program ever! Celebrate move-in day with a fall worthy celebration sooner than you can get to Kamenz Kafe for a pumpkin spice latte!
Don't FALL for fake mortgage programs
For the most part, mortgage programs are all based around the same guidelines. Qualified Mortgages (standard like FHA, VA, USDA and Confirming) and Non-Qualified (more accurately non-standard) have specific required guidelines all loans must be underwritten to. Underwriting is when the lender verifies all of the information submitted, such as income, assets, debt and the property details to determine if your loan can be approved. The underwriter compares your loan application and submitted documents to the loan program guidelines and any internal company overlays. A company overlay is an extra guideline or requirement that is not standard for the loan program itself, but company specific.
Often mortgage companies will announce or market a "niche" product claiming to have a new or proprietary program. Although the unique marketing of the program may seem proprietary, the loan program is generally still the same basic loan available with most all lenders. This is very misleading because unless the company is keeping the loan as a portfolio program in house, they just channeled their inner "Fancy Nancy" and used a fancy word for a common mortgage program.
Why does this matter? When a company dresses up a program they give you the impression you won't find a better option elsewhere and stop you from exploring your options. Or if giving credits and perks, typically they are building in those costs to the fees or the rate. Which means you are potentially falling for fake credits or a fake program. This is very common when purchasing a new build and using a builders lender. Often there are extra fees built in that cancel out the credit, but most of the time without an unbiased review you wouldn't know.
Know up front "Lender Fees" are NOT – repeat after me – "NOT" and industry standard. Companies that automatically charge fees in section A of a loan estimate are typically a retail model with built in fees. If you ask to pay no fees, which you shouldn't have to, likely they will say it's required or give you a higher rate to cover them. Why does this matter? Well, to start, why pay fees if you shouldn't? Second, when companies market special programs or credits it is typically built into these rates and fees. Knowing this, you can seek that unbiased review of your loan estimate. I provide free evaluations of loan estimates and have helped many borrowers feel confident they are in the right hands. As well as called out some lenders who were causing them to over pay.
Now back to that "Pumpkin Spice Mortgage," other than sipping a latte in your new home sweet home, sorry to say there is no special mortgage for it! One can only dream. Happy fall! Wondering if this is a great season to buy or sell? Reach out for a free consultation and market update review.
Alysha Boles is a Mortgage Loan Advisor and Debt Strategist that specializes in both the planning, pre-approval and loan process of mortgage lending. Licensed in California and Texas and the ability to connect you with a licensed professional in all 50 states. She can be reached at (661) 858-7214, or inquire online at http://www.advisoralysha.com.