With the home mortgage market being a virtual minefield for consumers shopping for a mortgage, it is in the best interest of the shopper to avoid the hazards when selecting a loan provider. Here are some of those hazards and some ways that they can be avoided.

Lender Fee Escalation: Because the dollar fees charged by the lender may be fixed, they are still estimates on the Good Faith Estimate. They are not locked in along with the points and interest rate. Some lenders will find new fees as loans approach the closing. Of the three major parts of the home loan the lender fees should be the least troublesome portion of the price. They are designed to cover the cost of lending such as processing, document preparation, inspection, etc. These costs do not change much in a short amount of time. So, there should be no reason that the lender should not be able to guarantee the price they quote the borrower.

Lenders will lock the rate and points as soon as they have a borrower that they feel will close with them. The lock usually will take place 30 to 60 days before closing, unless the borrower decides to float the terms hoping that prices will decline. Lender fees can change at anytime, including the day of closing. The Good Faith Estimate was developed by HUD to help borrowers shop knowledgeably for settlement costs. In actuality is provides legal permission for lender to cheat borrowers at the closing table. One of the biggest problems is that all the numbers on the Good Faith Estimate are subject to changing right through till closing. There are no penalties for over or under estimations in the costs that will be corrected at the closing table. Until HUD corrects the error, the borrower can request a written list of lender charges before submitting an application and inform the lender that you expect it to be an honest total of the lender fees. In most cases it will be.

The Mortgage Professor's 4-Step Approach to Avoiding the Hazards.

1. Be the selector, don't be selected. Don't respond to solicitations, except to say "No"

Not every loan provider who solicits is a predator, but all predators solicit. Avoid solicitation by hunting through the yellow pages.

2. Decide whether to price shop or hire and expert to shop for you.

Price shop if:

You like to be in full control of the process.
You are prepared to invest time in educating yourself.
You are comfortable with a computer.
You have good credit.
You have documentation for your income and assets.

3. If you elect to hire an expert, select among those who guarantee their work.

4. Decide the major features of your loan.

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