So you probably received a mailing from a mortgage company called Winnpointe.  It looked something like this:

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You searched the Net and didn’t find any particularly disturbing complaints about them.   But that’s changed.   In fact, recently,  the Consumer Services Division of Washington’s Department of Financial Institutions office went after this, and other mortgage companies, for fraudulent or deceptive advertising.    Winnpointe notes that in response to this complaint, Winnpointe chose not to do any more business in Washington.   It also paid a $10,000 fine and donated $10,000 to a Financial Literacy Program

Should this assuage you?  Our major beef with Winnpointe is that they are attracting customers with deceptively low rates and then pushing 15-year loans upon customers who won’t benefit from them.  We looked more deeply into Winnpointe when we got their mailer which offers an unusually low mortgage rate and promised reduced mortgage payments.  The 3.25% loan advertised in this mailer is for a 15-year loan, but you can’t know that unless you read the fine print.   We filled out their website “application” and got a call from a cheerful salesman.  So here’s the catch:  in very, very small type hidden at the bottom of the mailing (the last line of the small-font disclaimer), Winnpointe was simply offering 15-year fixed loans to people with 30-year loans. Their rates are a touch higher than other 15-year fixed loans offered in California.  Winnpointe is offering loans where consumers spend very little out of pocket. ($495). In exchange, you pay a slightly higher market rate (currently, about 2.875% on a 15-year-loan) This is about 175 points above what other online brokers are offering. What’s that difference mean? Well, on a $400,000 loan, your monthly payment will be $2,738, whereas with the lower 2.75% loan you’d pay $2,714 each month. So over the life of the loan, you end up paying $4,320 more than if you went with the lower interest rate loan with higher closing costs. The closing costs of loans by other lenders run between $1000-$2000. So we aren’t seeing Winnpointe as offering a particularly good value proposition for savvy consumers.

We wish they’d been more honest with the consumers that they are targeting and their rates, while competitive, aren’t blowing us away.  For more information about how to refinance your mortgage, check out our article here.