Bait and Switch

[Tanya]

Mr. Murray, or whomever can answer this: please give me a typical scenario of a "bait and switch" game in the manufactured home industry. I have a sinking feeling it was done to us today.
Tanya

[mac]

We quote you a low price/interest rate/ other thing, then it turns out that item isn't available, or there are other costs that pop up once you are hooked.

[rmurray]

There are all kinds of sales tactics..What happened to you???????????

[Tanya]

Well, we definitely got quoted a lower interest rate previously than they now believe will be possible, of course, now they make it a bit clearer that they don't know what interest rate we'll get until the deal goes through. Basically, the sales manager and general manager went through this two hour good cop, bad cop routine "Oh we can't do that..." "Well, maybe we could..." "yeah, let me check on that..." "Yeah, but what about..." "We'll make it work for you..."

Somewhere in there, we agreed to raise our maximum monthly payment amount. Of course, they don't know that we're willing to go a little higher than that, so I guess we'll sit back and see what they'll squeeze into that amount, then ask them to add a few more options....how does that sound?

[rmurray]

Tanya..interest rates of the lowest loans have risen almost a full 1% in the last 3 weeks...Friday..Paul Volker...Chairman of the Federal Reserve made it clear they will rise much more in the next few months as well...One good example...Wells Fargo was closing manufactured home mortgages a month ago at 5.5%..Now they are quoting this same loan at 6.75%..and closing today at 6.25%...7 to 7.5% is likely in the next few months..

Your dealer is NOT the lender...He is now being very honest with you...(not using deceptive practises)...He cannot guarentee rates..period..Your rate will be determined when your application is approved (not prequalified)...EVEN THEN...mortgage rates are only promised for 2 weeks...this means if the home is being built...set up and takes longer than 2 weeks (It will trust me)..your rate could still be higher and the dealer can do nothing about it...

The crooked dealer would just let you think all was still at the lower rate...then sping the bump on you later..this bump could easily be $150/mo...Much better to have the bad news now..


Everyone wanted manufactured homes to be treated just like stick built when financed...these are the very same rules as stick built...

The best thing to do is be sure you are not priced up to your very top of your ability to pay...Your final payment could very well be higher than anyone can tell you now....Expect the worse...be happy if it does not happen..

[Tanya]

OK, so the interest rate can't be locked in at all until the home is completed? Ouch. It will probably take more than 4 months. They suggested doing an ARM. Does that make sense in this market? I didn't think it did, because when the variable period is over we'd probably be stuck with an even higher rate than we would this year.

Well this puts the other day in a different light. Maybe all that banter wasn't about trying to confuse us. Maybe they were honestly trying to figure out how they could get us into our home as fast as possible before the interest rates went up. And getting us to come up on our maximum payment was just being realistic...

Well, the interest rate news is depressing, but not hopeless. But the feeling that I may still be able to trust the people we're dealing with is very good news.

As much research as I'm doing, I still feel very naive. Thanks again, I don't know what I'd do without this board!!!!

[rmurray]

You dealer has a lender called Bank Source Mortgage...they will lock the rate at the close of the construction loan..even if it takes a few months to complete...Ask your dealer about BSM mortgage..

I hope you have a very good reason for waiting 4 months...This might cost you tens of thousands...Remember the 10 year average of fixed mortgages is about 7.75%..so these last few months of historically low mortgages has been the unusual...Rates will rise to the 7 plus area with in a few months..unless..we go into depression or deep recession with large unemployment...

Personally I would rather have a job...and be able to pay..than be our of work and not even be able to pay 1% rates..

Personally...a varible interest rate at a time of historical lows make no sense..unless you are paying off in 4 years of less..

With a fixed rate..you have the best of both worlds..if rate go back down (few expect this to happen)...you can always refinance with no penalty...If rates go up..you can brag about your low rates to all those who waited..Smile.

[Tanya]

I'm not waiting four months, the dealership estimated it may take that long to complete the build. Has to do with how busy things are in that town compounded by the relatively rural remote area we want to buy land in. Or something like that. No, we will hopefully get the deal together very soon.