Question:

Why people practice net jumping?

Answer:

Some consumers go to a broker and use broker's advice and loan information only to shop the Internet for a mortgage on their own - this practice is called mortgage net jumping. People who do that waste the broker's time by getting all the information they need and not closing a loan supplied by the broker.

Net Jumping Is Bad Credit Borrowers' Trick

Bad credit borrowers sometimes approach a broker for help with their credit, not only for a loan. The broker spends a lot of time attempting to improve their clients' credit to qualify them for a loan. In the end, the borrower walks away, credit improved, to get a mortgage loan on the Internet. Some brokers charge a fee for that service but many do not, fearing they would scare customers away.

Net-jumping is surely a borrowers' harmful practice. Consumers could use the Internet to educate themselves about loans and then approach a broker for a home loan quote. Or, they could inform the broker about rates on quotes they obtained online and suggest the broker beats them. In any case, some consumers feel justified playing tricks on the broker as brokers are notorious for charging borrowers extra fees, or offering them expensive loans and slipping harmful provisions in the agreement for a bigger commission.

However, there are other tricks borrowers play on loan providers beside net-jumping.

  • Lender jumping is a form of net-jumping: instead of going through the broker, the borrower approaches directly a lender.
  • Submitting many loan applications sometimes is a good idea although it is a waste of time for the many lenders and brokers who would check rates and put together a quote. Luckily, the process has been automated to reduce loan providers' efforts and borrowers do have a better chance getting a better loan shopping through multiple mortgage applications.
  • Lock jumping is similar to net jumping. Only that a lock agreement is signed and the borrower pays a fee for the right to have the rates locked for limited time. The longer the time, the more expensive the lock. However, if rates go up the broker or lender is expected to honor the lock agreement. If they go down, the borrower usually feels free to back off the lock agreement and tries to negotiate better terms with the broker, or threatens to approach another loan provider.
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