Author: Nick Kent Added: July 18, 2008
Copyright (c) 2008 Nick Kent Our mortgage market is in crisis right now. There are a variety of reasons behind the state of things, and one of the most significant issues is that brokers aren't giving borrowers all the information they need. But we (the consumers) are making it easier for them, by not asking the right questions! No one can blame you though (unless you're studying to become a broker). Lucky for you, this articles available to make things a little easier. Here are 5 pieces of information to demand of your mortgage broker before signing anything: 1) Yield Spread Premium - This is what the broker gets paid for marking up the rate of the loan above wholesale. The more of a markup, the more they get paid. It's the same concept as a car salesman being paid more based on how much more he's able to convince his customer to pay above sticker, only the salesmen is your broker, and the desk manager is the lender. There's nothing wrong with the broker making a living, but it's perfectly fair to negotiate this figure, to protect your own financial wellbeing. 2) Current Wholesale Rates and Par Pricing - When a borrower asks "What are today's rates?" what they're really hearing is "What rate would you like to sell me today?" When you're asking about rate, make sure to be more specific. "What's today's wholesale rate for a 5 year fixed at par pricing?" It's critical to mention par pricing, as that's the actual wholesale rate before any broker markup. 3) Mortgage Loan Disclosure Statement - It's all very well to accept what your being told at face value, but as my father always said, "a verbal contract isn't worth the paper it's printed on." Brokers are eager to offer a GFE (Good Faith Estimate), but it leaves out valuable information such as YSP. You're entitled to an MLDS, so make sure you get one. 4) Origination Fee - Make sure to take a look at the origination fee on the MLDS. Despite anything your broker tells you, this money goes directly to the broker's coffers, and is entirely separate from the YSP. Your broker's goal is to make a point in front and one in back. That's ridiculous. A point total is fair, in whatever ratio you and the broker negotiate. 5) No Fees/No Closing Costs - Nothing else in life is free, why would this be? Do you think the appraiser and underwriter are going to work pro-bono? Between the notary, escrow, title and other various services you'll need, the entire cost will be close to $3000. Obviously, "No Fees" companies make money elsewhere. Elsewhere would be the YSP. Sure it looks good from the front, but the broker's making a killing on the back. Understanding these 5 key items will help you protect yourself from being taken advantage of. Be aware in advance; most brokers won't like being asked these questions, but what's more important, their friendship, or your financial wellbeing?
--- Rate1st.com provides an simple, efficient, and safe way for borrowers to compare rates from hundreds of lenders without compromising their personal contact information or credit. For further home mortgage information, please visit http://www.Rate1st.com.
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