Study: Mortgage Cost One of Consumers' Biggest Concerns

One thing I have learned over the years is that everyone knows what their service is worth. Unfortunately, most consumers don’t really understand what they get for their money.

A local banker recently referred clients that wanted to refinance their FHA loan, that was secured by a three-family, that they no longer lived in. They had been receiving all kinds of junk mail, offering to refinance with no closing costs, at 2.75%. Most folks know, when something sounds too good to be true, it usually is.

They responded to the one of these letters, completed an application, paid $500 for an application fee, only to find out after three months, that the lender will not refinance a property that in not owner occupied, but were told they can’t get their $500 back.

They then contacted the lender that had the present loan, explained their situation. They were told that they could refinance, there would be no closing costs and the rate would be 4%, which was actually 2% lower than their existing rate. These clients happened to be speaking to a banker, where they do their banking and asked if they could refinance their property.

The banks said no and referred them to me. We took their application, locked their rate at 3.5% and they will have $2,500 in closing costs. Their monthly savings is $592 per month. In five months they will have recovered their closing costs, so where was the best deal for them?

Consumers Say Mortgage Costs Top the Issue List By: Evan Nemeroff