Home Mortgage Refinancing Guide

The Internet is an excellent tool for refinancing your home mortgage and can save you thousands of dollars; however, you need to know that big named mortgage companies run scams online every day. These are companies you see advertising on television and if you’re not careful you could overpay thousands of dollars for your next mortgage. Here are several tips to help you protect yourself when refinancing your home loan on the Internet.

When Lenders Compete You Lose

Have you seen those commercials on television about making banks compete for your business when taking out a mortgage? It sounds great…mortgage loans are a fiercely competitive industry and anything that gets lenders competing for your business can’t be a bad thing right? Wrong!

What is Lending Tree Really?

The first thing you need to know about Lending Tree is that they are not a mortgage lender and actually have nothing to do with mortgage loans whatsoever. Lending Tree and many of the other big named sites you see on the Internet are simply lead generation sites. They put up a flashy website, advertise on television, and sell your information to the four highest bidders. Lenders are competing for your personal information, not your business. Once these lenders have your information you will start receiving phone calls and emails soliciting mortgage loans.

The fact that you have lenders calling you isn’t really the problem with lending tree. The real problem comes from the fee they slip into your loan without your knowledge. Lending Tree for example tells you that they do not charge you a fee for using their service; however, the fine print says otherwise.

Always Read The Licenses & Disclosure Pages

If you read the fine print on Lending Tree’s Access and Disclosure statement you will find that while Lending Tree Claims they are not charging you a fee for their services, you will have a charge on your Good Faith Estimate that will be paid to them by the lender. Because you’re paying the lender the fee for Lending Tree they claim their service is free to use; however, the money still comes out of your pocket even if it’s being paid by the lender. This is only the tip of the deceptive advertising.

Reading further on this Licenses and Disclosure page reveals not only will you be charged a fee for filling out the form on Lending Tree’s website but this fee will be as much as $1,300. That’s $1,300 you’ll have to pay just for filling out your name and address on Lending Tree’s form!

Not only is this deceptive advertising on Lending Tree’s part but this is a ridicules fee to charge someone for selling their information to the highest bidder. Lending Tree had a class action lawsuit filed in 2006 for unfair business practices and deceptive advertising. Is this a company you want involved with your next mortgage loan? You can learn more about protecting yourself from predatory lending practices when refinancing and ways to save money in the process register for a free mortgage DVD.

Everyone’s seen the television commercials claiming to get mortgage lenders competing for your business. Is refinancing your mortgage using a company with an advertising budget as large as Lending Tree a good idea? The answer to this question will surely surprise you.

Take a look at Lending Tree’s website and you’ll find a link at the bottom of the page called “Licenses and Disclosures.” About halfway down the page in the midst of Lending Tree’s legaleze is a statement required by the Attorney General of Massachusetts in big black type. I’m going to quote a portion for you.

“LendingTree, LLC is not charging you a fee to arrange a mortgage loan from the mortgage Lender. If you choose the traditional LendingTree, LLC path, LendingTree, LLC will be receiving a fee of up to $1,300 from the Lender for arranging this loan. The amount of this fee will be disclosed to you on the Good Faith Estimate you receive from the Lender you select.”

Here’s the problem in plain English. Lending Tree claims they are not charging you a fee for using their site; however, they receive a fee of $1,300 that you have to pay. Hold on a minute, they’re not charging you the fee, but you still have to pay it to them. This type of corporate legal speak is known as a “Computerized Loan Origination Fee.” Are they being honest and up front about this fee? Absolutely not, and this is why the Attorney General of Massachusetts requires this statement in big bold letters as a condition of doing business in that State.

Unfortunately, the problem of Computerized Loan Origination fees is not limited to Lending Tree. Most of the mortgage sites you find on the Internet have absolutely nothing to do with mortgage loans and exist only to collect your personal information so it can be sold to mortgage lenders. There’s nothing wrong with mortgage lead generation until a company like Lending Tree passes their fee on to you. You can learn more about refinancing your mortgage while avoiding costly mistakes like Computerized Loan Origination fees with our free mortgage tutorial.

If you are in the process of refinancing your mortgage loan there are a number of garbage fees you need to know about. Unknowingly paying these fees will result in paying thousands of dollars unnecessarily for your new mortgage loan. The garbage fees I am referring to pertain to the “Computerized Loan Origination Fee” charged by many mortgage websites like Lending Tree, and the Yield Spread Premium charged by nearly every mortgage company in America.

Computerized Loan Origination Fees

This is a garbage fee charged by lead generation websites that have absolutely nothing to do with mortgage loans. They put up a flashy website, advertise on television with a catchy phrase about “lenders competing” and then sell your personal information to every mortgage lender willing to pay them. If you visit the Lending Tree website for example, look carefully at the Licenses and Disclosure link found at the bottom of the page. This disclosure statement explains that if you fill out the contact form on their site you will have a fee on your Good Faith Estimate for their part in “arranging” your loan. Guess how much this fee is? This Computerized Loan Origination Fee will set you back as much as $1,300, and all you did was fill out a form on their website! There are hundreds if not thousands of these lead generation websites littering the Internet. You can protect yourself by reading the find print before giving up your personal information.

Yield Spread Premium (YSP)

YSP is the markup of your mortgage interest rate by the loan originator for a commission. This commission is in addition to any fees you pay (or overpay) for arranging your mortgage loan. Mortgage companies and brokers do this because the wholesale lender pays them a bonus of one percent of your mortgage amount for every quarter percent you pay over the interest rate you qualified. Not exactly an incentive to keep mortgage brokers honest is it? Fortunately there are ways to avoid paying retail markup of your mortgage interest rate; homeowners who negotiate with their mortgage broker to avoid paying this markup will save themselves thousands of dollars. You can learn more about avoiding Yield Spread Premium, Computerized Loan Origination fees, and other costly mistakes with our free mortgage refinancing video tutorial.

If you are considering refinancing your mortgage with lendingtree.com you should reconsider if you don’t want to overpay for your next loan. LendingTree claims there is not fee for using their service; however, this is simply not true. You will pay LendingTree as much as $1300 for using their website to find a mortgage lender. Here is how LendingTree deceptively makes their money referring your business to mortgage lenders.

If you head over to LendingTree’s website and click on the link for Licenses and Disclosures you can read how LendingTree makes their money. LendingTree claims they are a “Computerized Loan Originator.” This means they are acting as a broker and are paid for referring your business to mortgage lenders. They claim: “LendingTree, LLC does not charge you any fees for its services.” This is simply a bold face lie.

If you scroll down the page to the “Good Faith Estimate Addendum” you will see that LendingTree receives a “Computerized Loan Origination Fee” of up to $1300 and this charge will appear on the Good Faith Estimate you receive from the lender. Because the fee is charged by the lender and paid to LendingTree they claim you are not charged for their services. Either way, you’re still out $1300 and LendingTree is lying about their fees. Does it matter who charges you the fee for their services?

How can you avoid paying Computerized Loan Origination Fees? Do your own online mortgage research you can comparison shop from a variety of mortgage lenders and apply directly from their websites, avoiding third party fees charged by sites like LendingTree completely. To learn more about mortgage refinancing while avoiding costly mistakes, register for our free mortgage tutorial: Mortgage Refinancing, What You Need to Know.