How the Mortgage Industry and It’s Regulations Hurt Consumenrs
Oftentimes, experts advise everyone who gets a personal loan for mortgage purposes to shop around as much as possible. It might seem repetitive but it is true. In fact, all the experts in the field state that whenever searching for personal loans for mortgage purposes, customers simply don’t research appropriately.
It is definitely true that mortgage shopping is not that easy. In fact, it can be frustrating and extremely time consuming. However, all these problems are easily worth it, especially considering how incredibly costly for borrowers can be to take just about any personal loan for mortgage purposes. Several studies have shown that all borrowers who only get one quote might overpay as much as $1,000 in closing costs. That, without even considering the difference in interest rate.
In all honesty, when it comes to choosing the best personal loan for mortgage purposes, nothing can beat contacting lenders directly and compare all offers.
The problem is though, that current mortgage regulations and lender practices make this a kind of a difficult process, and unnecessarily so, which is why the Consumer Finance Protection Bureau should start looking into it as soon as possible.
Here’s the issue: If nowadays you call any mortgage retailer to get a mortgage quote from them, you will be asked countless questions, and might even be asked to reveal your Social Security number. Even worse, you might be asked to go over to the mortgage agency to start an application even before they give you the personal loan’s rates, fees and other terms. Obviously, this shouldn’t even be necessary and in fact, several borrowers feel abused when these mortgage companies run a background check on them just to give them a simple price approximation.
One of the possible solutions that experts are suggesting to solve this issue is to fix a “stated price”, as well as a “final price” arrangement. With this kind of arrangement, consumers could just provide mortgage lenders with their credit score and a loan-to-value ratio. Mortgage companies would then have to provide the lender with the estimated terms requested for the personal loan, all based on the information provided by him or her.
The “final price” mentioned above would be of course subject to the person asking for the personal loan providing verifiable proof of their income. This way this information could be come the standard and shopping from one mortgage personal loan lender to another would be conducted in the exact same way.
Another issue with this process that is always present is that a personal loan for mortgage purposes always suffers from inflated interest rates, which are further affected by the number of fees that are paid. What this means is that at first, you might be tempted in applying for a personal loan for mortgage purposes from a particular mortgage agency due to the lower interest rates on the personal loan, only to later find out that the additional fees you’ll have to pay for that mortgage personal loan are completely out of line with what can be found on the rest of the market.
Simplifying the process for shopping for mortgage personal loans would not only save a considerable amount of time and headaches to borrowers in the future, but also, by being better informed, customers can rest assured that they are getting the best deal possible while mortgage companies secure customers for possible personal loans in an honest way.
In short, better-informed consumers that have to deal with documents they can easily understand are more likely to get better deals and be return as customers. Hopefully, with time, mortgage companies and personal loan companies will soon understand that as well.