Everyone knows bait and switch is illegal but that doesn’t mean it is not practiced, especially in the mortgage industry. Here’s how it works.

Mr. Client makes a call to Lender B and asks what their rates are. After answering a few questions the mortgage consultant for Lender B asks what rates other companies have offered Mr. Client. After hearing what his competitors are offering Lender B will beat the lowest rate and the lowest points, no matter how low Mr. Clients says he’s been offered. Lender B knows there is no way he can close the loan at the rate he promised and it doesn’t matter that he can’t. His client will take whatever he offers.

I know that sounds crazy but it works nearly all the time. All Lender B has to do is wait until the loan is set to close, then he calls Mr. Client with some reason why he can no longer offer the rate he sold. He can offer a different rate, even if that new rate is as much as a percent higher. So how does Lender B get away with it?

This really only works with non prime lending and works best when they have a client that is paying off revolving debt with the loan. Many clients, confident the loan will close in time stop making car payments, card payments, and sometimes mortgage payments and they pocket the saved money. They are that sure that the loan will close and pay all that debt off.

Fast forward three weeks into the loan process and they are told the rate will be significantly higher, but will still close on time. Mr. Client can either stop the loan process and go to another lender or go through with the loan. The problem with starting over with another lender is the client hasn’t been making their debt payments and may even incur new late payments on their report. That could easily lower their score enough to where they cannot get a rate that even equals the new rate their lender changed on them. They may be out of money because they have begun spending expecting cash out at the closing and suddenly they are in a position where they cannot afford to start the clock ticking with a new lender.

Lender B has his client over a barrel and they both know it. So how can you prevent the above scenario? Number one, do not stop making any kind of payments. Pay them up until the loan funds. That will alleviate most of the problems. When Lender B quotes a rate, if it sounds too good to be true, it probably is too good to be true. Trust your gut. You have to find a broker you can trust and that is a subject for another article.

529 College Savings Plans are arguably the best way to fund your children’s higher education, and has long sense surpassed the traditional methods like, Custodial Accounts and Educational IRA’s.

A 529 Plan is an educational savings plan is a plan set up under the IRS code 529, to help families fund their children’s education, and have significant tax breaks. I does not matter what state you live in or what state your child goes to school in; you can still fund his or her 529 plan.

Here are 5 benefits of 529 plans that you’ll want to know about.

Federal Tax Breaks: While your deposits in the plan are not deductable on your tax return it grows tax deferred. When your child is ready to attend college, distributions that are used for those expenses are tax free. It’s not hard to imagine the bite the IRS would take out of an investment that grew from twenty grand to two hundred grand, and that is what used to happen to the old college savings accounts, like custodial accounts. Keep in mind, if you use the money for non college expenses you will be subject to federal and state taxes.

State Tax Benefits: Nearly every state offers the same benefits as the Feds do, but just check in your particular state to make sure. If your state does not offer any benefits at the state level, just switch to a state that does, and you do not have to move to receive those benefits.

You Control the Funds: Unlike the old custodial accounts and Educational IRA accounts, the 529 account does not automatically become the property of the beneficiary. In other words, if your child decides not to go to school he cannot just take the money and run when he turns eighteen. You can hold on to the funds or fund the education of a younger sibling or a relative. Of course if your child does so well he/she gets a free ride in the school they are going to, then you can use the funds to help another child.

Large Deposits are allowed: With the old accounts, there were always the strict limits the IRS put on such accounts when it came to deposits. In many states you are able to contribute $300,000 or more, a far cry from the $500 limit of the old Educational IRA’s.

Flexibility: You have the ability to change 529 plans if you decide the plan of a different state is more beneficial than your current plan. You can do this once every twelve months for the life of the account.

So there you have it, five of the top benefits to the 529 plans. Do your research, determine which plan is most beneficial to you and get started funding your children’s college education.

Related Links: How to save money for college | How to save money on education costs

What happens to my credit score when a mortgage lender checks my credit? The old answer used to be, “your score drops.” Not so any more.

If you are getting ready to purchase a home, or refinance an existing home, do all of your investigation within a thirty day period. The law says your score will only drop one time in a thirty day period if you are getting a home loan or purchasing a car. If you have the first potential lender run your credit on March first, make sure that at the end of the month you don’t allow any other lenders to check your credit. That of course could lower your score, maybe enough to disqualify you from the low rate you could have had.

“But my lender warned me not to let anyone else check my credit or my score will drop.” That’s a common sales tactic to scare borrowers from shopping around; don’t believe it. The next question people often have is, “How much could my score drop if I apply for a loan outside of my thirty day window?”

I had the opportunity to ask a representative from TransUnion that very question and received the following answer. “There is no way to tell for sure.”

Before I could object, he qualified his answer and here it is in a nutshell. How much ones score will drop is dependent on a number of factors. Some of those being; number of revolving accounts open, debt to available credit ratio, length of time accounts have been open, and of course adverse factors like late payments on accounts. Those are just a few factors that influence how much you score will drop.

Be safe, do all your searching for lenders in the thirty day window and you won’t have to worry about your score dropping fifteen points and disqualifying you from the best possible rate you qualify for.

Don’t tell your appraiser about the leaky faucets: Or the mildew on the ceiling and the water stains on the wall. If you have any similar issues there is no point in having an appraisal done. Your appraiser will notice these issues however minor and he will include it in his report. Your lender will of course see it and halt the process. You’ll have to fix the issues then have the lender send the appraiser out again to verify the problems are taken care of. You will probably have to pony up another $100. Once your loan has been pulled out of the line in the funding process it could easily cost you fifteen days or more.

Leave the five broken down cars on your lot: Okay, so maybe you are not operating a car repair shop on your off days, but your appraiser and lender don’t know that. If it is decided that you have income producing property there are different guidelines and it may cost you points and a rate. It may even cost you the loan. Clean up your lot and clear out anything that may be misconstrued as a side business on the premises, either inside or out. I’ve had borrowers who failed to mention they operated a daycare in their home and the lender was not happy to find that out late in the funding process. I was not too thrilled either.

Occupy your owner occupied home: Everyone is looking to get the lowest possible rate and no one wants to pay that extra one percent in rate because the home they are refinancing is a non owner occupied home. Quite often borrowers will tell the lender and the appraiser it is occupied by them but there are ways the lender can find out. For example, the docs you sent in all had a home address different than that of the “owner occupied” home they are refinancing. That one catches a lot of people. If the appraiser inspects the house and strangely finds pictures of the Ramirez family on the walls instead of the McKenzie family you’ve got a problem. You may still get away with it. Bear in mind most lenders require you occupy an owner occupied home for one year and if it is found in that time that you do not live there the entire balance of the loan can come due. Just don’t take the risk.

There are any number of ways to derail your loan process and those are just a couple common ones. Be honest and upfront with your lender in the entire process and you will find you are having a much better experience.

For those who are looking to refinance their home, determining the value of your house can be critical. No one wants to go through the long and laborious process of a refinance only to be shot down by a value that is too low to go ahead with the loan.

Ideally you should try to determine your home’s value before starting the process, and here is one way to do so. The first thing I would do is check the last appraisal and find the value you got on it. If it has been a couple years or more you will probably find your home value has increased. However, with the meltdown in the real estate market, your home may not have appreciated much so finding an accurate value is very important.

Look for the appraisers name and phone number at the bottom of your last appraisal report and start with them first. Make the call to the appraiser, let him know your plans, and ask him to give you a comparable value. Let him know if you have done any work on the home that may affect its value. Be honest as well if there are some issues that may negatively impact its value. Appraisers don’t like surprises and neither will you when your home appraises for less than expected. The appraiser that did your last inspection will probably remember your home after he glances at your report and he is more likely than anyone to give you a reliable value. Keep in mind of course, that the value he gives you on the phone is just an estimate. You will still need a full inspection. Still, once given an estimate, they are usually pretty accurate and you will likely not be surprised down the road.

Most of the work of an appraisal is done in the office doing research on the computer. In fact the average appraiser will spend thirty minutes at your house and another five hours in the office. Even if the guy who inspected your home has moved on, they will probably still have the appraisal in their computer system. Any appraiser there should be able to access it and call you back with a value.

Once you have that value, you are green lighted to go ahead and find a lender to work with. If you cannot determine who did your last inspection there are ways to find your home’s value so look for other articles addressing this issue.

I can’t tell you how many times I have been on the phone with a dismayed borrower whose appraisal came in less than he’d expected, and the homes they hoped to use as comparables just weren’t comparable.

Just because the house is across the street from yours doesn’t make it comparable, even if the square footage and bedrooms and baths are the same. If you live in a typical suburban neighborhood, but the house across the way is in a private gated community, it is just not comparable to yours. If your bay windows open out to the back of Safeway while his butts up against the eighteenth hole, you may not be able to use that one, or your value will be downgraded accordingly.

Location, location, location. Most lenders want comparable sales that are within blocks rather than miles, or even one mile. Once you get farther away than just a few blocks and are looking at a half mile or more, it’s a different neighborhood than yours and it can’t be used as a comp.

If your house is an immaculate four bedroom dream home but you are surrounded by dilapidated ranch style homes your home’s value will be adversely affected; keep that in mind.

Quite often when people are looking for comparable sales they overlook the age of the home. Even if the potential comparable property is similar in every other way, some lenders won’t accept it if it’s not at least in the same ball park as the other homes age.

If you live in an A-Frame house let any prospective lenders know upfront. Unless that style of home is standard in your town you won’t be able to find any comparable sales and that is an issue for a lender. If you happen to own any kind of a unique home you will still have the same problem.

By unique I don’t necessarily mean a glass house for example, but if you happen to have a house on 80 acres and everyone has a standard lot, you’ve got a problem. If you live in a house that is completely off the power grid, tell your lender right away. Unless everyone else is off the grid, you have a unique property and it will be tough to impossible to get comps. If your house is solely dependant on solar energy you live off the power grid; same goes for the guy with nothing but a wood burning stove and a gasoline generator.

Time and time again borrowers will tell me of the house down the street that went for 450,000, only to find out after a bit of research that the house was for sale for that amount and has yet to sell. You cannot use sales prices; you have to use the amount the homes near you have sold for, and in the last 3-6 months. Many lenders want comparables that have sold in less than three months, but that depends on the lender.

Bottom line, if you do your footwork you should be able to come up with a value that’s pretty close to being accurate and you can feel good about taking the next step with the lender of your choice.

You don’t need to lose your ATM card for someone to steal the money from your account. You just need to swipe the card in a compromised ATM machine to give all your information to identity thieves. ATM Skimming is the process in which crooks steal your ATM card information without your knowledge. Wall Street Journal published article detailing this prevalent identity theft problem.

It’s always a better idea to use the ATM machines only in the bank branches. Do not use the ATM card when you travel abroad. Do not use ATM card in gas stations, strip clubs and in any place where the ATM machine looks different than usual. According to Wall Street Journal, sophisticated skimming devices are placed right over a card-reader slot that allows the scammers to capture the information embedded on the magnetic strip of a debit or credit card. Camera mounted on the right place also captures your hand movements and PIN number. If you are curious about how a skimmer would look like, take a look at the following video.

It’s highly recommended to cover the keyboard with the other hand when you key in your PIN to block anyone or a camera from seeing your PIN. This may seem paranoid, but it’s better to look paranoid than actually losing lot of money. If the ATM machine looks different than usual or if it looks crooked or damaged, just walk away.

Related Link: Man accused of installing cameras in ATM machines

Gold bulls are enjoying time of their life! Gold keeps rallying to new heights because there is widespread expectations that Federal Reserve bank is keen to implement quantitative easing policy, if US does not see economic growth. Every major country in the world is trying to weaken their own currency to improve their export markets. When the local currencies weakened, gold offers sweet spot for the currency traders. Almost all the metal traders are looking at $1,350 an ounce by the end of this year. Don’t be surprised if this target is met in the next two weeks. When there is uncertainty in the world and economy, gold is the place to be.

Few weeks ago, London Bullion Market Association conference in Berlin made the prediction that gold will rise to a record of $1,450 an ounce in the next year! There were even talks about gold going to $2,000 an ounce.

If you’re pessimistic about the world economy, you should be bullish on gold and other metals such as silver, platinum and palladium. However, if the economy improves in many major countries, the interest in gold will subside down considerably.

If you want to trade gold, you don’t need to buy and hold the metal. You can trade Gold ETF (GLD). If you are experienced with options, you can sell covered calls on GLD  and make decent money as long as gold price doesn’t go down dramatically. If you are bullish on gold, selling puts on GLD is also an attractive option.

Disclaimer: I don’t own GLD at the time of this writing.