If you are in the Atlanta area… or even if you aren’t… you’ve probably heard the commercials.  His tagline is “It’s the biggest no-brainer in the history of Earth.”  Usually he starts with some obvious pronouncements… and then he launches into something else.

But a recurring theme is “… no closing costs.  We don’t roll them into the cost of the loan, we pay them…”  There is one little problem.  He fails to mention that the consumer DOES pay the closing costs… in fact, they pay WAY more than the closing costs.  They pay a bit of that every month.

How you ask?

With a higher interest rate.  The broker makes a better spread by charging a higher rate.  So, he makes his money on the front end because he can sell the loan for more money.  If you keep the loan for a while, that extra little bit of interest rate can cost several times the original closing costs.

My friend Ken Cook at Novation Mortgage ran across a Cease and Desist order from the state of Georgia against this company for deceptive advertising practices.  Here is a link to Ken.

Now, why do I bring this up?

Honestly, if you are buying a house from me, I don’t care so much where you get your loan.  To a certain extent.  What I don’t like to see:

  • Buyers getting ripped off by high rates
  • Mortgage brokers that don’t fulfill their promises (fail to fund, don’t stand behind their pre-qual letters, don’t return calls while things are going south)
  • Mortgage Brokers that put their buyers through the wringer before giving them a loan.
  • Buyers being lied to.

So, I don’t care where my buyers get their loan.  I don’t get kickbacks from lenders for steering business to them.  I recommend a few people… because I know that I won’t have to deal with the things I don’t like to see.  Occasionally, I might ask that one of the lenders I know run a buyer through their process (especially when I am working with a seller and things for the buyer are looking wonky).

The reason for the post is that I am tired of this particular company not telling the truth.

And here is how you can tell…

Get several quotes.  Call a couple different brokers.  If someone is out of the normal range, ask why.  If they are low, ask if they are going to bring YOUR loan in to closing at that rate and payment.   Ask how you can be sure of that.

And, the biggest no-brainer in the history of Earth is to think that this guy doesn’t make any money when he writes a loan…