Friday, March 9, 2007

What can happen with a bad loan agent?

Believe it or not, not all loan agents want to get the best deal for YOU.

Someone had called me who claimed to be my mortgage's account rep asking how things were going. I was considering a refinance, to roll up the equity loan I have which has higher rates. My mortgage sits around $184,000 while my equity loan sits at nearly $43,000. I also mentioned that I was interested in taking about $5000 cash out. Current estimates of my house value are near $300,000, which gives me a little breathing room.

He initially told me I could get a 5.5% on a 30year fixed with P&I payments near $1485, and asked if I wanted to lock in which I said sure.

Once I got the paperwork and was able to read through it, I saw many red flags.

1. The interest rate he quoted was not what was in the paperwork. It was 6.25%.
2. Also he failed to mention that I'd need to pay for 2.875 discount points, which rolled into the loan so I didn't have to pay cash up front.
3. Instead of the $5000 cash I asked for, the paperwork showed him taking $19,000 cash out.

All these things caused the loan to go over the 80% loan to value ratio, which means I'd have to pay mortgage insurance as well.

On top of all this, as he is my account rep, I'd expect him to mention that my current loan has a prepayment penatly (which thankfully I remembered before continuing).

My lesson learned is to keep aware of existing contracts and read EVERYTHING (which I did). Also, make sure you ask every question you can think of, and never assume anything. If I would have just signed those papers and sent them back, I'd be even more upset over this situation that I already am, and possibly more in debt (with less hope to recover qiuckly) than I currently am.

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