I remember when I went to buy my first home. It was an exciting experience searching for the least run-down property in the worst part of town. But hey, that didn’t matter because that’s what I could afford. When it came to finding a mortgage company, I just went with the recommendation of my real estate agent. I knew nothing about mortgages and nothing about the process of being approved. That was my first mistake. I was the perfect candidate to get “juiced” by a “mortgage consultant.”

For all of those that have little to no knowledge about mortgages and shopping for a home loan, the internet is likely a great place to start the search for information.

So let’s say our imaginary borrower Bill gets on the web and searches for a mortgage lender in his state…or city. What Bill is likely to find is a number of mortgage comparison sites. Some of the sites look professional and trustworthy and others look like Mrs. Wilson’s 4th grade class took a stab at web design. Bill chooses the trustworthy mortgage comparison site and enters all of his information before submitting his request for a mortgage. What happens next?

A mortgage comparison site works by submitting your loan request to about 4-6 different mortgage companies so they can contact you with offers. Those companies range from your average bank, mortgage broker, mortgage bank, and credit unions. Somebody is surely going to offer you the best mortgage, right? Maybe. A mortgage company that pays a premium to receive your loan request likely has a seasoned mortgage salesperson calling on the leads they are paying good money for. SALES is the key to successfully acquiring new borrowers and closed loans if the mortgage company pays for their leads. By selling you on a loan and interest rate, they can lock you in to working with them.

Ok, so you’re not the person that takes the first offer. You want to hear all the offers. So you wait a day and talk to 4-6 lenders who all want to take an application with you (and pulling your credit of course), to make sure you qualify. You go with the lender that offered the lowest rate and fees. But what if those 4-6 lenders don’t offer low fees or the lowest interest rates that can be had? What if all 4-6 lenders were banks with high interest rate loans? You’ve just compared the worst of the loans out there and picked the best one. That’s kind of like picking from a selection of old socks to wear and choosing the one with the smallest hole. It’s only a compromise. I’m not saying you won’t get good offers, but remember one thing, lenders receiving leads from mortgage comparison sites know they have to sell their clients into working with them because the other mortgage sharks are circling the waters waiting for the busy signal to go away so they can contact you. Believe me, all of them will say, “we can do better than X company.” They might, they might not. I don’t need to go into the definition of bait and switch to make my point abundantly clear.

The fun doesn’t stop there. It’s not uncommon that you will receive calls for months at a time if you use a comparison site. Why would you get calls long after you filled out the application? The answer is simple. Some companies will sell your information again - this time as an aged lead…perhaps a “turn down” lead if you didn’t qualify, or maybe you filled out a lead form on a site that actually sells your information 8 times and all 8 mortgage companies that received your information want your business. You’re Mr. Popular now - so popular in fact you might just disconnect your phone line.

My advice if you are searching for a mortgage lender is to complete an application with a single company you can trust and compare their offer to your local bank. Do some research on rates and don’t always listen to advertising gimmicks. If the interest rates are so low it’s suspicious, turn away. Mortgage comparison sites have good intentions. They want their site visitors to feel like they are making an informed decision. It isn’t always the case.