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Better Business Bureau ®
Start With Trust®
Denver & Boulder, Colorado
Thousands Check Out Mortgage Firms as Home Sales Rise
March 26, 2013

DENVER – Purchasing a home is one of life’s largest expenses and as corrupt practices formerly plagued the industry, home buyers are more careful than ever about choosing mortgage brokers.

Since the beginning of 2013, the Better Business Bureau of Denver/Boulder has received almost 12,000 inquiries into mortgage brokers, making it the second-most inquired about industry so far this year. This is an increase compared to the same time period in 2012 when the BBB received 10,683 inquiries.

“Even as the industry has become better regulated in recent years, mortgage companies are still trying to rebuild trust with home owners and buyers,” said Su Hawk, president and CEO of the BBB of Denver/Boulder. “Home buyers continually ask the BBB about companies and a more than 12 percent increase in this industry’s inquiries suggests they are being smart about mortgage firms,” she added.

As many home owners are refinancing and home sales are increasing, the BBB expects inquiries on mortgage firms to continue to increase. Home sales hit a three-year high in February, according to the National Association of Realtors.

When choosing a mortgage company, the BBB offers the following tips:

· Find a BBB Accredited business at www.denver.bbb.org and always check out any mortgage firm with the BBB first before hiring.

· Ask the mortgage broker if they are licensed and verify it with the Colorado Division of Real Estate. As of Jan. 1, 2009, mortgage brokers who originate residential mortgage loans in the state of Colorado must be licensed.

· Conduct research on current interest rates. Inquire on the advertised rates and understand if they are adjustable rate programs (ARMs) or fixed-rate programs. ARMs may cause your monthly payment to fluctuate within a given period of time.

· Understand the charges (Points & Fees). Most borrowers can expect to pay a one percent origination fee (one point) and as well as other standard closing costs, which would include appraisal, title, lender and processing fees. Clarify and compare all fees before proceeding and consult a third party if you are not comfortable with the broker's answers.

· Get the details (No-Cost Loans). No-cost loans are generally higher interest rate loans. The interest rate is increased and the lender pays the broker additional money that can be used to cover the closing costs of the loan. Make sure that you evaluate the ‘breakeven point’ of the loan, meaning, how long will you be staying in the loan versus the cost of the increased interest rate that covered the fees of the loan.

· Do you have the right to rescind? With a refinance loan on a primary residence you have a three day rescission period after the closing to review your closing documents and to decide if you wish to keep the loan or turn it down. On a Purchase loan or a refinance on a second home there is not a recession period, so make sure you take the appropriate time necessary to evaluate your documents before signing.

· Watch out for predatory loans. Predatory loans may have extremely high interest rates, excessive fees, pre-payment penalties that do not meet regulations.

· Ask for the required disclosures. A licensed mortgage broker is required by state and federal regulations to provide disclosures containing: terms, conditions, costs/fees, annual percentage rate, net tangible benefit, rate lock-in, equal credit, equal housing and others within a specified timeframe. Take the time to understand everything and make sure all disclosures are made and you understand them.

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About the BBB

The BBB is an unbiased nonprofit organization that sets and upholds high standards for fair and honest business behavior. Businesses that earn BBB Accreditation contractually agree and adhere to the organization’s high standards of ethical business behavior. The BBB provides objective advice, BBB Business Reviews, BBB Charity Reports and educational information on topics affecting marketplace trust. To further promote trust, your BBB also offers dispute resolution services for consumers and businesses. The first BBB was founded in 1912. Today, there are 113 local, independent BBBs across the U. S. and Canada. Please visit denver.bbb.org for more information.