Thursday, September 17, 2009
Money-Back Guaranteed? Maybe or Maybe Not
Have you ever bought a high-ticket item like a TV and then when you are browsing through the Sunday sale ads you see the same exact TV for $300 less? Some stores will allow you to bring the store receipt of your purchase along with the sale ad showing the cheaper price, and as long it has been within 30 days of your purchase, will refund you the price difference.
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
Some mortgage lenders have the same “price guarantee” offer when it comes to your closing costs. if you can show them that you paid less in closing costs with another lender, they will refund you the difference? You may be asking yourself is this for real? More importantly, you should be asking yourself what is the catch.
First, you have to be able to provide the mortgage lender with a detailed copy of the Good Faith Estimate (GFE) and the Truth-In-Lending (TIL) statement provide to you from the lender that you are using that is beating their pricing. That may not seem too hard, but this also must reach them within a 24-hour period of you receiving it. Again, this is not the end of the world. Usually you receive these items within a few days of applying for the loan. The real catch is that the Good Faith Estimate (GFE) is just that – an estimate. These are not your final costs, nor are these costs set in stone.
Until you can show the lender what your final costs were and are able to prove the total costs were lower than what they were offering you, and then they will not fork over the cost differential to you. Think about it. The time that lapses between you receiving the GFE and TIL and actually closing on the loan could be anywhere from two weeks to a whole month. Do you know how many things could change in the mortgage industry in a 14 to 30-day period that could affect your mortgage costs? The answer is a lot could happen.
So while it may seem like a great idea to earn yourself a little money-back guarantee, it probably isn’t something that you should hang your hat on.
Related Resources
- TIL: Truth in Ledning [PDF] (occ.treas.gov)
- GFE: Good faith estimate (wikipedia.org)
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