Buyers (and you) should beware of the “Rate and Switch!”

Last week as I’m listening to the radio (yes, I’m old fashioned and don’t stream), I heard an ad for a low mortgage rate that captured my attention. “Looking to buy or refinance your home? Rates are still historically low and you can lock in your loan at 3.25%, call Rocket Mortgage today!”

By this time, I’ve hushed the children and blasted the radio — until I heard the disclaimer. It went something like, “blah blah….rates are valid as of 12/20/2021…blah blah.” And there it was — the mortgage company was drumming up business by offering a low ball rate from the past that they know they can’t offer today.

Although this makes the phone ring, it is a form of bait and switch — or as we like to call it “Rate and Switch.”

Another technique I’ve seen more lately is companies advertising below market rates and hiding upfront fees (points) in the disclaimer.

Points can be anywhere from .5 -3% of the purchase price for a small reduction of interest rate. Often it takes 5-6 years for your client to pay back a point, where they would pay less in interest over the same time period.

Although we don’t lead with point based pricing, Key Mortgage always provides the client the counsel and options so they can choose what works best for them.

At Key Mortgage, it’s our job to find the “Rate and Switch” and get buyers into the right loan. We offer $100 to any buyer for letting us give their loan a Second Look, whether they use us or not. Call one of our Key Mortgage Loan Officers today for more information on this offer.