The Mortgage Insider has an interesting article called The 13 Biggest Mortgage Lies - After Yield Spread Premium. The article cautions mortgage consumers on a number of unscrupulous practices the author has witnessed by mortgage providers in his experience. While there is some sound advice offered, you need to take in the content with the same trepidation the author advises be taken with the mortgage financing industry as a whole.

The author warns of the “N0 Closing Cost” lie, and contends that these fees will often find themselves added back in by means of a higher interest rate. I completely agree. It is for this very reason that you must compare mortgage offers by their Annual Percentage Rate (APR). The federal government requires that lenders quote the APR as mortgages are offered on different terms. This allows consumers to compare the true cost of borrowing or in effect compare apples to apples.

The author also cautions against falling prey to misleading advertising. Again I agree. Lenders want your business and they only way they have a chance at getting it is buy connecting with you. Advertising allows them to dazzle prospective customers with attractive offers and entice them to call. But advertising is like this in any industry. The flyers you get in your mailbox are chock full of loss-leader designed to get you into the store where well trained sales people will try to up-sell you to a more profitable product. You simply need to adhere to the old adage that if it sounds too good to be true it probably is.

However, some of the other advice the author presents I don’t agree with. He states “Never take agent referrals as your selection process when it comes to finding a mortgage company. And I mean never..ever…ever!” Clearly he feels strongly about this. He then goes on to say “After reading all of this website, believe me, you know more than any agent on the planet and most loan officers as well.” This is simply too much, even for hyperbole. The truth is agents can be a valuable source for a referral to a lender when buying a home. You see the agent wants to close the deal and sell a home. They often have a list of mortgage partners that they have had good results with in the past. These are lenders who have proven to provide good customer service, speedy turn arounds or have “gone the extra mile” to get an approval. The agent’s reputation is on the line when they make a referral. Their client will not hesitate to speak loudly to other consumers if the agent refers them to a lender who did not perform up to expectations, or only offered solutions that were far inferior to what else was available. Again you must be accountable for your own due diligence, but to right off all agent referrals as unreliable or containing a hidden agenda is for too extreme.

He cautions about mortgage “bait and switches” and says to never buy a house from a big builder, but to buy an existing home instead. But what if you don’t want an existing home?

In summary there are unscrupulous lenders out there. The mortgage consumer must be cautious and take an active role in the process. But there are a lot of good people and reputable companies out there as well. And when you connect with them, they can make your home purchase and even more rewarding experience.