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Misleading mortgage advertisements online

The Internet has become a driving force in the real estate world. More people are not only now buying their homes online, but they are financing them on the web too.

Mortgage websites have become increasingly popular over the last few years, which means more companies are advertising online.

With more companies doing online advertising and promotions, there is a greater likelihood that they are advertising false mortgage pricing, and this is exactly what is going on.

A recent lawsuit against a popular mortgage and financial website, Bankrate.com, brings the issue of misleading online advertising to a head. This is just one example of how hard it is for consumers to find reliable financial advice on the web.

The article, ‘Popular mortgage web site under scrutiny for lending practices,” by Michael Hudson of The Wall Street Journal Online, discusses this current law suit that could change the way lenders advertise.

“ The lawsuit is against Bankrate Inc., the financial publisher behind the popular bankrate.com site that draws millions of visitors yearly through partnerships with Yahoo!, AOL and other top online companies. Bankrate provides advice, loan calculators and articles on financial topics. It supplies interest-rate data to eight of America's 10 largest newspapers, including The Wall Street Journal. It also caters to lenders, who compete to attract borrowers by posting their deals on bankrate.com. But the company's reliability as a consumer tool is being challenged in the lawsuit, filed by a former advertiser that accuses the company of allowing its Web site to become a haven for "bait-and-switch" loan pitches.”

The law suit claims that Bankrate allows advertisers to promote false promotions and pitches on their website.

“At the center of the case is a bankrate.com feature that asks mortgage shoppers to enter information about the mortgage they want, including their location, the desired loan type and how much they want to borrow. The Web site provides a "rate table" that lists offers from a number of lenders advertising on the site.”

“Mike Dannelley, American Interbanc's founder, alleges customers who click through to specific lenders often aren't given the deals that are offered on the rate tables. Although borrowers aren't required to take the more costly loan, the practice can waste time in booking a mortgage and leaves some consumers vulnerable to accepting a higher rate.”

Many consumer advocates are urging consumers to be weary about finding a mortgage online, because although the majority of lenders are honest, reputable businesses, there are many out there who are looking to take advantage of people.

“Financial experts advise consumers to consider walking away from a deal if they feel a lender isn't living up to its promises. Other advice: See if anyone has started a Web site to slam a particular lender's service, or check out sites such as ripoffreport.com. Don't take them as gospel, but use them as food for thought.”

You should also be comparing the annual percentage rate or APR instead of the interest rate, because the APR includes other charges and fees that the interest rate does not. This gives you a better picture of the actual cost of the loan.

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