When evaluating mortgage options, most people focus on terms because the terms directly relate to the amount they will have to pay out each month and over the term of the loan. After rifling through tons of advertising material, the borrower inevitably finds one loan that is so much better than the others being offered. While this may sound like a good scenario, one must wonder if it really is.

There is a time-tested cliché that says if it is to good to be true, then it isn't true. In the case of mortgage loans, the adage definitely applies. It is hardly difficult to find a loan being offered by a lender that appears clearly better than all the others. One might find an offer for no point, no fees and a mortgage interest rate that is half a percent lower than any other on the market. Beware of such loan offers.

The mortgage industry is hardly immune from the bait and switch tactics of other industries. From the more dubious lenders, one will often see an offer that seems amazingly good. Under law, the lender must actually offer the advertised loan package. In practical terms, however, few such loans are written.

The bait and switch works like this with lenders. They advertise an incredibly good mortgage package. You see it and apply. They evaluate your loan package andregret to inform you that the application is rejected because of some minor detail. If you are in the process of escrow, this puts you under a lot of pressure. The lender will then helpfully suggest there is an alternative loan they can issue to you. With time running, you agree to the loan. After escrow closes, you come to realize the terms are worse than anything else you saw in the various advertising material. You are unable to refinance for better terms because your loan also happens to have a prepayment penalty.

Are the best loan rates always an indication of something fishy? Of course, not. That being said, make sure you remain cautious about deals that seem to good to be true.