Daily Dupaco

Friday, November 18, 2011

Homebuyer beware: paying for an accelerated loan payoff

Homebuyers know what it's like to be bogged down with paperwork.

But the barrage doesn't end at the closing table.

Often within days of the purchase, homebuyers are inundated with mailings that appear to be coming from their lender. Usually, they're not from the lender.

These "offers" come from so-called mortgage service companies peddling mortgage insurance and solicitations to set up automatic bi-weekly mortgage payments. And the recipients often are left wondering whether they're being required to complete more documents.

Even those who work in the financial services sector find the mass mailings confusing. Jennifer Hanniford, Dupaco Community Credit Union's assistant vice president of interactive marketing, recently refinanced her mortgage. About a week later, the "offers" started arriving in her mailbox.

"None of them were very clear in stating who their company really was," she said. "Even as an employee of Dupaco, I wasn't sure if some of the pieces I'd received were from Dupaco. I actually had to ask someone here."

Leigh Ann Reisner, a mortgage consultant at Dupaco, says she fields many calls from confused members who receive similar mailings. Reisner says third-party companies, with no connection to the lender, obtain the information from public records.

"It's a business," she says. "They market to people who have just received a new mortgage, and they solicit these buyers to set up biweekly payments. They sell it as this accelerated payment program to help get your loan paid off faster.

"But there's always a fee attached to do it."

If you receive a similar mailing, look at the mail piece closely to determine whether it came from your lender. If you're not sure, ask your lender.

Talk to your lender before setting up biweekly payments through any third-party. Oftentimes, your lender will do that for you at no cost, unlike the solicitation that arrived in your mailbox.

By Emily Kittle

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