Like most people, I have refinanced my mortgage to get a lower rate. My previous lender was Schwab Bank and my new mortgage is with Quicken Loans. Since then, I have been flooded with information enticing me to refinance again and at an even lower rate. It is obvious to me when I read this material that even with the slightly lower rate, the fees involved would not make up the difference in interest rate so I ignore them.
Last week when my husband picked up the mail, he was excited to see an offer from Quicken Loans at a rate that I quickly figured in my head would save us another couple of hundred dollars a month, and they advertised no fees. I was excited at the prospect of saving even more money by our current lender even though we had just refinanced the year before.
Of course, no loan has zero fees so I took the postcard ad from him to examine the offer more or look for a website to read the details. To my surprise the ad wasn’t from Quicken at all, but from a securities firm that was acting as a mortgage broker servicing Quicken loans. In other words, it was a scam. It was a damn good one, too. It made me look twice and I wondered how many people would have taken the time like I did to get my magnifying glasses on to read the fine print to prevent me from making that call.
In August 2012 a Financial Literacy study by the SEC discussed the existing level of financial literacy in the U.S. They found- “Studies reviewed by the Library of Congress indicated that U.S. retail investors lack basic financial literacy. The studies demonstrate that investors have a weak grasp of elementary financial concepts and lack critical knowledge of ways to avoid investment fraud.”
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I am a professional Financial Advisor and I almost got taken. If it can happen to me, it can happen to you, too. The most common fraud is not in securities industry, but in the real estate industry- loan brokers, appraisers, contractors, bankers, title insurance, etc. Buyers beware and read the fine print always and if you don’t understand, ask me.