Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice » Theft by Mortgage

Avoid These Refinance Traps

Robert — Thu, 21 May 2009 17:39:51 +0000

If you are in the process of refinancing your home mortgage loan there are a number of pitfalls that can result in overpaying thousands of dollars per year.

These pitfalls range from the markup of your mortgage rate to junk fees that raise your monthly payment. Avoid these refinance traps and you can save thousands of dollars every year that you keep your mortgage. Here’s what you need to know.

Avoid These Refinance Traps

What are mortgage refinance junk fees? Anything that serves no purpose other than boosting the mortgage broker’s commission at your expense is a junk fee. Mortgage brokers receive compensation for their work from a number of sources and if you’re not careful these fees can result in overpaying thousands of dollars every year that you keep the loan.

The first mortgage broker fee you’re likely to encounter when refinancing your home mortgage is the loan origination fee. This is a fee paid to the mortgage broker specifically for their part in arranging your loan. A reasonable amount to pay the mortgage broker for loan origination is one percent of your loan amount; however, many brokers will try and pad this fee. This origination fee, while frequently overcharged, is fairly straightforward and will appear on your Good Faith Estimate and HUD-1 statement.

Don’t Put Much Faith in Your Good Faith Estimate

The law requires mortgage brokers to provide you a copy of the Good Faith Estimate as part of their disclosures; however, there are no standards as to what fees have to be disclosed to you and many are conveniently left off to make expensive loan offers seem more attractive. Your Good Faith Estimate is little more than a marketing tool used to lure homeowners into overpriced home loans… don’t trust this mortgage document.

If you can’t rely on the Good Faith Estimate when shopping for a mortgage loan what can you trust? There are two reliable documents you will receive when refinancing your home loan. The first is the original written rate lock confirmation from the mortgage lender and the second is the HUD-1 Settlement Statement; however, neither one of these documents help you shop for a mortgage loan. Make sure that the rate lock confirmation you receive comes from the mortgage lender and not the mortgage broker and never accept verbal confirmation of your rate lock. As for the written confirmation, make sure it comes from the mortgage lender and is not typed up on your broker’s letterhead. Many mortgage brokers pass off bogus rate lock confirmation in an attempt to hide their markup of your mortgage interest rate.

How to Shop for a Mortgage Loan

A common refinance trap to avoid is shopping for a mortgage loan like you would a kitchen appliance. While it’s true that mortgage loans are retail products and are subject to the same type of markup that results in overpaying, you don’t want to try making apples to apples comparisons of your mortgage loan offers. There is simply no reliable way to screen mortgage loans when refinancing due to these limitations of your disclosure documents.

The best way to shop for a new mortgage when refinancing is not to compare loan offers, but shop for the right mortgage broker instead. When you find the right person to arrange your next mortgage you’ll avoid all of the refinance traps that I’ve mentioned here today. How can you find the right mortgage broker to arrange your home loan? It’s not as hard as you might think; however, there is one other junk fee we need to discuss known as Yield Spread Premium.

Unnecessary Mortgage Broker Fees

Ask most mortgage brokers about Yield Spread Premium and they get defensive, even angry. Many think that as a mortgage broker Yield Spread Premium is their birthright. The simple fact of the matter is that charging an origination fee and Yield Spread Premium is advantageous and wrong. What is Yield Spread Premium? Simply put, it is the number one refinance trap to avoid and according to the HUD Secretary will cost homeowners in the United States sixteen billion dollars this year.

Yield Spread Premium is a Trap

Not only is Yield Spread Premium a trap that drives up your mortgage payment unnecessarily, like the jelly of the month club it’s keeps doing it all year long…every year you keep the mortgage loan. Yield Spread Premium is a fee paid to your mortgage broker for locking and closing your home loan with a higher than necessary mortgage rate. Mortgage lenders reward your mortgage brokers for overcharging you with this commission. Because you’re closing with a higher mortgage rate than you deserve your monthly payment will also be higher than it needs to be, meaning you’re overpaying as long as you keep this mortgage loan.

Yield Spread Premium works as an incentive from the lender for overcharging you. For every .25% you overpay on your mortgage the broker receives a bonus of 1.0% of your loan amount in addition to the origination fee you’re already paying. The good news is that like any other refinance trap, Yield Spread Premium and other junk fees can be avoided.

You can learn more about this article Avoid These Refinance Traps, including which mortgage fees are junk like Yield Spread Premium by registering for my Underground Mortgage Videos. Register today and you’ll get immediate online access to all the videos without downloading anything to your personal computer.

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Mortgage Brokers Have a Dirty Little Secret

Robert — Mon, 06 Apr 2009 16:49:47 +0000

Did you know your mortgage broker has a dirty little secret? Most professions have a few skeletons in the closet but this one could cost you thousands of dollars every year that you have a home loan unnecessarily.

In fact, this “secret” is so bad that the Secretary of Housing and Urban development said it will be responsible for fleecing American homeowners out of sixteen billion dollars this year alone. What is it? Read the following mortgage tips to help you avoid paying too much for your next home loan.

Mortgage Brokers Compensation

Mortgage brokers should be paid for their work like anyone else; however, like a used car salesman they have ways of padding their commission at your expense. You can expect any mortgage brokers you work with to charge you an origination fee for their services. This origination fee will be clearly marked on your Good Faith Estimate and HUD-1 statement; however, there is a hidden mortgage broker fee you need to be aware of before refinancing your home mortgage.

Mortgage Brokers Secrets

The second way mortgage brokers get paid for their work is a hidden commission from the lender. This commission will never appear on your Good Faith Estimate and most brokers have clever ways of disguising it on your HUD-1 settlement statement. This secret commission from the mortgage lender is called Yield Spread Premium and if you agree to a mortgage with this hidden markup it can cost you thousands of dollars every year that you keep the loan.

Yield Spread Premium is Hidden Markup

Here’s how Yield Spread Premium works. Suppose you are refinancing your home for $250,000 and the mortgage broker quotes you an interest rate of six percent while charging you a two percent origination fee. On the surface six percent sounds like a good deal, even though the origination fee is double what you should be paying, you agree to the loan. This means you have to pay $5000 to the broker for loan origination, your home gets refinanced and everything went smoothly, right? Wrong… What your mortgage broker isn’t telling you is that you were approved for a mortgage rate of 5.25 percent, but they marked it up to get Yield Spread Premium from the lender.

Yield Spread Premium is a percentage of your loan amount created when mortgage brokers lock and close loans with higher than necessary interest rates. You get stuck with a payment based on an interest rate higher than you deserve just to create a commission for the broker. A commission paid in addition to the loan origination fees your mortgage broker is already probably overcharging you…

Hidden Mortgage Markup

How does this hidden markup of your mortgage rate affect your monthly payment amount? In the previous example Yield Spread Premium adds a hundred dollars a month to the payment for a thirty year fixed rate mortgage. That’s $1200 a year you’re throwing down the drain due to your mortgage broker’s deception! Most mortgage brokers don’t talk about Yield Spread Premium and many become angry and defensive when questioned about the markup. Can you blame them? Yield Spread Premium effectively doubles even triples their compensation on the loan… at your expense of course.

You Can Avoid Overpaying for Your Next Mortgage

You don’t have to be a financial guru to get a good deal on your next home mortgage loan. Tell potential mortgage brokers that you will not accept any loan that includes Yield Spread Premium and that you’re willing to pay a one percent origination fee for their services. There are honest mortgage brokers out there willing to work for a one percent origination fee without marking up your mortgage rate and I can send you a list of them in your area.

There are other mortgage junk fees that you need to keep an eye out for: mortgage broker courier fees and rate lock fees are examples of junk fees you should never agree to pay when refinancing your home loan. Before closing on the new loan make sure you get a copy of the HUD-1 settlement statement and go through it with a fine-toothed comb; don’t rely on the Good Faith Estimate to look for these junk fees as this document is little more than a marketing tool used to lure homeowners into overpriced loans.

What About Bank Mortgage Loans?

Can’t you avoid all of this markup and trickery by mortgage brokers simply by refinancing with a bank mortgage loan? While it’s true that your bank doesn’t charge Yield Spread Premium on their loans because your loan is funded with the bank’s money; however, banks have another kind of markup called Service Release Premium that accomplishes the same thing. Also, your bank doesn’t have to disclose Service Release Premium to you because of a loophole in the Real Estate Settlement Procedures Act. You’ll never get as a good a deal from your bank as you could from an honest mortgage broker that hasn’t included Yield Spread Premium on your loan.

What is a Good Mortgage Rate Anyway?

Refinancing your home loan and dealing with mortgage brokers and lenders can be overwhelming. How do you know a good deal when you spot one? The ideal mortgage rate when refinancing your home is what’s known as a par mortgage rate. “Par Mortgage Rates” are ones that don’t cost you discount points to get or create any commission for the Mortgage Company or broker. You’ll never get a par mortgage rate from any bank or credit union and can only get this from the right mortgage broker.

To learn more about refinancing your home loan with the lowest mortgage rate without junk fees or mortgage broker markup register for my Underground Mortgage Videos. You’ll have immediate online access to the mortgage videos as well as a list of mortgage brokers in your area that do not mark up mortgage rates for a commission without downloading anything to your PC or Mac.

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Best Refinance Interest Rate

Robert — Wed, 04 Mar 2009 18:32:40 +0000

Are you in the process of refinancing your home mortgage loan and are searching the Internet for the best refinance interest rate?

You might not know something about the mortgage rate quotes you find online; something that could wind up costing you thousands of dollars. Here are several tips to help you find the best refinance interest rate and save yourself thousands of dollars in the process.

Best Refinance Interest Rate

What is the best refinance interest rate? Is it the lowest mortgage rate you can find online or is it the lowest rate that doesn’t include junk fees or markup to give the broker a commission? Did you know that mortgage brokers mark up mortgage rate quotes to get a commission from the lender while charging you a fee for originating the loan? This fee paid by the lender will often double, even triple your mortgage broker’s commission for arranging your loan. Does the mortgage broker arranging your loan deserve to make that much money from your loan? If the lender’s paying this extra fee to the broker why should you care?

It’s not the fact the lender pays this fee to your mortgage broker that should concern you; it’s why the lender is shelling out so much money that should worry you when refinancing your home loan. Why do mortgage lenders reward brokers for closing loans with higher than necessary mortgage rates? You might think that after closing on the loan your mortgage lender sits back and collects interest from your mortgage payments. That’s how they make their money right? In most cases, no that’s not how mortgage lenders profit from your loan. In fact, mortgage lenders make the majority of their profits by selling your loan to investors on the secondary market. Someone else services the loan and profits from your mortgage interest; in most cases it’s not the lender that you started with when refinancing.

What does all this mortgage mumbo jumbo mean for you? Mortgage lenders know that home loans with higher than market mortgage rates bring them a premium profit when sold to investors; this is why they reward mortgage brokers for locking and closing your home loan with a higher than necessary interest rate. This fee paid to your mortgage broker for overcharging you has a technical mortgage mumbo jumbo title and is called Yield Spread Premium by those in the business. If you want the best refinance interest rate for your next home loan you simply must avoid any and all Yield Spread Premium on your loan.

You Don’t Have to be a Financial Guru

Many homeowners are intimidated by the process of negotiating with a mortgage broker. You don’t have to be a financial guru to pull off refinancing your home loan with a mortgage rate that hasn’t been marked up to give the broker a commission… you just need to find the right broker. My Underground Mortgage Videos will show you exactly how to find and negotiate with the right mortgage broker to get the best refinance interest rate for your home.

You know finding the lowest mortgage rate when refinancing is important because the higher your mortgage rate, the higher your monthly payment will be. Here is an example to illustrate how this unnecessary markup of your interest rate by the mortgage broker drives up your monthly payment.

Suppose for example you are a California homeowner refinancing for $375,000. Your mortgage broker quotes you an interest rate of 5.75% and charges you an origination fee of 2.5%. This origination fee will cost you a whopping $9,375 at closing. Again, follow the RefiAdvisor system outlined in my Underground Mortgage Videos and you’ll find a mortgage broker willing to refinance your loan for a flat one percent origination fee saving yourself $5,625 in origination fees alone…. you should really register for these mortgage videos.

What about that mortgage rate of 5.75%? What your mortgage broker isn’t telling you and you’ll probably never find on your Good Faith Estimate is that the lender actually approved you for a mortgage rate of 5.25%; however, your broker marked it up to get that commission from the lender. Your lender pays the broker a commission of one point for every .25% they markup your mortgage rate. Remember that one point is defined as one percent of your mortgage loan amount. In this case the broker gets two points, or two percent of your loan amount for locking and closing your home loan with a higher than necessary mortgage rate. This is Yield Spread Premium on your home loan.

What does Yield Spread Premium do to your monthly mortgage payment? Spend a few minutes with a mortgage calculator and see for yourself. In this example on a 30 year, fixed rate mortgage at 5.75% your monthly payment will be $2,190. Had you gotten the mortgage rate you deserve at 5.25% your monthly payment would have been only $2,070. That’s a savings of $1,440 per year! Still not convinced that you need my Underground Mortgage Videos? In this example these mortgage videos would save you $7,065 the first year alone!

You can learn more about getting the Best Refinance Interest Rate without unnecessary markup to give your mortgage broker a commission by registering for my Underground Mortgage Videos. Register today and you’ll have immediate online access to the mortgage videos without downloading anything to your PC.

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Best Mortgage Rate 2009

Robert — Fri, 16 Jan 2009 19:58:58 +0000

If you’re considering refinancing your home mortgage loan and are looking for the best mortgage rate in 2009, there are several things you need to know in order to avoid overpaying for the new loan.

Most homeowners have heard of mortgage junk fees but very few are familiar with the evils of Yield Spread Premium or how it raises your monthly payment unnecessarily. Here are several tips to help you get the best mortgage rate in 2009 when mortgage refinancing.

What is Yield Spread Premium?

Mortgage brokers receive compensation for their work in two ways. Your broker will typically charge you an origination fee for their part in arranging your loan which will be disclosed on your Good Faith Estimate. This fee could be as much as five percent but typically runs anywhere from 2-3%. One percent is actually a reasonable fee to pay your mortgage broker for loan origination.

The second way mortgage brokers receive compensation is from Yield Spread Premium on your loan. Yield Spread Premium is a percentage of your loan amount paid by the lender when the mortgage broker locks and closes your home loan with a higher than necessary mortgage rate. I say “higher than necessary” because the mortgage broker is already being compensated for their work with the origination fee you’re paying. Any amount of Yield Spread Premium on your loan could effectively double or triple the broker’s compensation on your loan.

Best Mortgage Rate 2009

In order to get the best mortgage rate when refinancing your mortgage you’ll need to avoid Yield Spread Premium completely. This unnecessary markup of your mortgage rate can add hundreds of dollars to your monthly payment, and for what reason? Just to give your mortgage broker a bonus to make their boat payment? Not on my watch…the free videos on this website will show you not only how to avoid Yield Spread Premium and lender junk fees responsible for homeowners in the United States overpaying nearly sixteen billion dollars every year according to the government.

Check out my Underground Mortgage Videos today and you’ll get immediate online access to the mortgage tutorial in my password protected memberhip area and a list of mortgage brokers in your area that do not pad their loans with Yield Spread Premium.

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Amerisave Mortgage

Robert — Sat, 27 Dec 2008 21:06:40 +0000

If you are considering taking out a mortgage to purchase your new home or refinance an existing home loan with Amerisave Mortgage, it’s well worth your time to check the lender out before signing on the dotted line.

One way of checking out a mortgage lender before taking out a loan is to look at customer complaints. Here is RefiAdvisor’s review of Amerisave Mortgage to help you make an informed decision before taking out your next home loan.

Amerisave Direct Lender. Over Six Billion Funded.

Visit Amerisave’s website and you’re greeted with this claim of six billion dollars in loans funded. They claim to have closed over 10,000 loans in all fifty states and offer an “on time closing guarantee” that will pay you $1,000 should they fail to fund your loan in time. They also offer a “$500 low rate guarantee.” Of course these “guarantees” come with lots of fine print so you should carefully review the conditions before basing your decision on Amerisave’s “guarantees.”

Amerisave Mortgage Company Contact Information

Phone Numbers:

866-970-7283
404-736-1798
404-260-7524
404-424-0632

Address:

Amerisave Mortgage
One Capital City Plaza
3350 Peachtree Rd Suite 1000
Atlanta GA, 30326

Amerisave Mortgage operates their business as a Mortgage Broker Bank, similar to Ditech.com and eLoan. This means they close their home loans in their company name and fund the loans themselves, making Amerisave exempt from the Real Estate Settlement Procedures Act (RESPA). Because Amerisave is exempt from RESPA disclosure legislation you’ll never know how much money they’re making off you by marking up your mortgage rate.

Amerisave mortgage actively purchases mortgage leads from the likes of LendingTree.com and LowerMyBills.com, two internet lead generation sites with less than sparkling reputations. If you’re a regular reader of this blog you know that Lending Tree’s computerized loan origination fee is passed on to the consumer, as much as $1200 at closing.

Amerisave Mortgage Complaints

According to the Better Business Bureau, Amerisave mortgage had 145 complaints filed during the past 36 months and only 57 of them were resolved in twelve months. Searching Google for Amerisave mortgage complaints reveals 684 listings, including those from RipOffReport.com, which could be worth your time in reading.

If you’d like to learn more about refinancing your mortgage without paying too much check out my free Underground Mortgage Videos on this site and you’ll discover how wholesale mortgage rates can save you thousands of dollars in junk fees and unnecessary markup.

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Sample Good Faith Estimate

Robert — Tue, 18 Dec 2007 22:51:34 +0000

Many homeowners rely on the Good Faith Estimate when comparison shopping for a mortgage loan. While it’s true that the Good Faith Estimate gives you more information than the Annual Percentage Rate (APR) there are important limitations you need to be aware of before choosing a lender based on this document. Here are several tips to help you choose the best loan offer when refinancing your mortgage.

How do you really know which mortgage is better when refinancing? Do you choose the loan with the lowest mortgage rate regardless of closing costs and other fees? Do you go with a lender claiming to offer no fee mortgage refinancing and hope that you’re getting a competitive mortgage rate? When it comes to refinancing your home the answers to these questions are not black and white but depend on your individual financial situation. In order to make sense of your options when refinancing it helps to understand how loan originators and mortgage lenders make their money.

The first thing you need to know is that mortgage loans are sold on a commission basis. Your loan officer or broker is not interested in giving you a fair and accurate mortgage quote whatsoever; this person is only interested in selling you the loan that nets them the largest commission. To accomplish this goal the Good Faith Estimate that they give you may provide very little truth about the actual costs involved with your loan.

Wait a minute, isn’t the Good Faith Estimate required by law? Mortgage lenders are required by law to provide you a copy of the Good Faith Estimate; however, this document is merely an “estimate” given in “good faith.” We all know that estimates have a nasty habit of changing before everything is said and done. Another problem with your Good Faith Estimate is that your loan officer or broker knows that most people have no idea what wholesale mortgage rates are, or even how they work. Because this person is paid by commission it’s not in their best interest to give you a good mortgage rate. The more you pay when refinancing, the more money they stand to make.

Because your Good Faith Estimate is just an estimate, like many other salespeople, loan officers and mortgage brokers tend to “stretch the truth” in order to get a sale. I say stretch the truth; however, in most cases this means flat out lie. These people know the wholesale rate that your lender approved you; however, they mark this mortgage rate up to get a commission from the lender. This markup of your mortgage rate is frequently omitted from the Good Faith Estimate entirely.

This is why most mortgage quotes you receive are anything but accurate.

Did you know that an honest mortgage broker needs 17 pieces of information before they can quote you an accurate mortgage rate? If your loan officer or broker is not asking you for the following information they are just feeding you a line to get your application processed.

Here is the information need to accurately quote a mortgage interest rate:

1. Loan Type: Mortgage Refinance or New Purchase
2. How Much Are You Borrowing?
3. If Purchasing, Do You Have a Down Payment?
4. What is Your Credit Score?
5. What Type of Property Do You Have?
6. Will You Be Taking Cash Back?
7. What is Your Employment Status?
8. What is Your Property Address?
9. Is Anything Being Paid in Escrow?
10. What is Your Home’s Value or Purchase Price?
11. Is This Your Primary Residence?
12. What Type of Loan?
13. What Term Length?
14. How Long Have You Been Employed?
15. Do You Have a Bankruptcy?
16. Has Your Property Been Listed For Sale?
17. Are You a US citizen?

If you receive rate quotes without providing this information you are getting a bogus quote. The person quoting you has no intention of honoring the rate they are giving you. You can save yourself a lot of money and future headaches by avoiding this person all together.

The good news is that you can find honest mortgage brokers willing to work for a reasonable origination fee without marking up your mortgage rate. You can learn more about choosing the best mortgage offer for your situation when refinancing, including expensive pitfalls to avoid with a free mortgage refinancing DVD.

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Insider Mortgage Secrets

Robert — Mon, 17 Sep 2007 19:02:45 +0000

If you are in the market for a new mortgage loan, doing your homework before applying can literally save you thousands of dollars and many headaches. The mortgage industry has earned a reputation for sleazy sales tactics rivaling the worst used car salesman; most mortgage brokers today only care about pulling in a six figure salary regardless of who they step on. Here are several tips to help you avoid being taken advantage of when taking out a new purchase mortgage or refinancing your existing loan.

Tip Number One: Beware Bank Originated Mortgage Loans

Many people think banks and credit unions are the best places to shop for interest rates. While this can be true for savings accounts and CDs, taking out a mortgage from your bank or credit union is a very bad idea. Banks and credit unions are exempt from the Real Estate Settlement Procedure Act (RESPA) that protects homeowners from abusive lending practices by requiring mortgage lenders to disclose their profit margins and mortgage rate markup. The Banking Lobby spent millions of dollars making sure Congress excluded mortgage bankers from this important disclosure legislation; as a result your bank does not have to play by the same rules as other mortgage lenders.

Banks Charge Service Release Premium

Banks make the majority of their profit by selling mortgage loans to investors on the secondary mortgage market. Banks make the majority of this profit by charging above market mortgage rates. Your bank knows the mortgage rate you would qualify in the wholesale market; however, banks set their own rates to include the markup known as Service Release Premium. Because banks are exempt from RESPA they will never tell you how much they’ve marked up your mortgage interest rate. In fact, bank employees will often show you their rate sheets and swear their rates are not marked up. Only by comparing the bank rate sheet to the par rates charged by wholesale lenders can you see the bank’s markup. Why would you ever consider taking out a mortgage from someone that doesn’t have to play by the rules?

Tip Number Two: Mortgage Brokers Charge Yield Spread Premium

We’ve already established that mortgage bankers are evil, but what about mortgage brokers? Like your bank, mortgage brokers make the majority of their profit by marking up your mortgage interest rate. This markup of your mortgage rate is called Yield Spread Premium and is responsible for the sleazy pressure sales tactics used by mortgage brokers today. Mortgage brokers charge Yield Spread Premium because the lender pays them a bonus of one percent of your loan amount for every quarter percent they mark up your rate. Most brokers do this without telling you.

Mortgage brokers have clever ways of disguising their markup on the HUD-1 settlement statement and often leave it off the Good Faith Estimate altogether. When questioned about Yield Spread Premium many brokers become defensive, even angry, telling you that because this fee is paid by the lender and that you shouldn’t worry about it. What you should worry about is why this fee is being paid by the lender. The fee is paid because you are accepting an above market interest rate that could raise your payment hundreds of dollars each month unnecessarily. Did you know the Secretary of Housing and Urban development was recently quoted saying that homeowners overpay nearly sixteen billion dollars annually because of this markup?

How to Avoid Paying Yield Spread Premium

By avoiding this unnecessary markup of your mortgage interest rate you can refinance with a wholesale mortgage rate. Start by asking your mortgage broker what the “par” rate is and ask to see the rate sheet from the wholesale lender. Make sure the rate sheet you see is from the wholesale lender and not typed up on your mortgage broker’s company letterhead. Tell your broker that you understand how Yield Spread Premium works and will not tolerate the markup or any kind of “lender paid compensation” on your loan. It’s usually best to negotiate with a self-employed mortgage broker that owns their business as brokers working for large firms often lack the authority to make a deal like this.

If your broker agrees not to charge you Yield Spread Premium on your mortgage, you’ll have to pay an origination fee for their services. Origination fees are often inflated and a reasonable fee to pay is one percent of your loan amount. Also, look for anything on your HUD-1 that resembles an application fee, processing fee, rate lock fee, or broker courier fee. These are garbage fees that you do not have to pay.

Tip Number Three: Beware Internet Junk Fees

Many people think that taking out a mortgage online will save them money. While it’s true that the Internet is an excellent tool for researching loan offers, there are just as many people online trying to take advantage of you. The mortgage giant Lending Tree is a perfect example. First of all, Lending Tree is not a mortgage lender. They are involved in mortgage lead generation and if you read the Licenses and Disclosure Statement found on the website you can see how Lending Tree fleeces their customers.

Lending tree is so bad that the Attorney General of Massachusetts required them to post a statement in large black letters disclosing their fees. In this statement Lending Tree discloses that they are not charging you a fee directly for their part in arranging your loan; however, if you choose a lender from their “network” there will be a fee on your Good Faith Estimate for as much as $1300. This “Computerized Loan Origination Fee” is paid to Lending Tree at closing and is money (a lot of money) out of your pocket, just because you filled out a form on Lending Tree’s website.

Watch Out For Computerized Loan Origination Fees

Always read the fine print found in the disclosure statements when visiting mortgage websites on the Internet. If a website does not have a disclosure statement, consider this a red flag and move on. One example of a website without a disclosure statement is E-Loan. E-loan is not required to disclose for the same reason your bank is not required to disclose. E-loan operates as what is known as a “mortgage broker-bank.” This means E-loan closes the loan in their company’s name instead of a wholesale lender, and is exempt from the Real Estate Settlement Procedures Act.

Always ask your mortgage broker if they close in the name of a wholesale lender or their own company’s name. If the answer is that they close in the brokerage’s name you know that they are operating as a broker bank and do not have to play by the rules. Scratch this mortgage broker off your list and move on. If you would like to read more advice about refinancing your mortgage without paying too much, register for the free mortgage refinancing blueprint.

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Three Day Rescission When Refinancing Your Mortgage

Robert — Tue, 14 Aug 2007 20:29:54 +0000

Most homeowners have heard about rescission but do not understand how it works. The three day rescission allows you time to review all of your documents after closing to make sure the loan you got is the mortgage you were promised.

You have until midnight on the third day to cancel your loan for any reason. This serves to protect homeowners from the pressure sales and bait and switch tactics commonly used by mortgage lenders.

Your mortgage broker is supposed to inform you of your rescission rights; however, most brokers conveniently forget to disclose this to you when refinancing your mortgage. If you decide to take advantage of rescission you will need to fax the written cancellations to your mortgage broker, lender, and Title Company involved with your loan. The three days time frame you have for rescission include any business day, Monday thru Friday and Saturday, excluding Sunday and Federal holidays.

Suppose for example you close your loan on Tuesday. Your three day rescission period will be Wednesday, Thursday, and end Friday evening at midnight. Remember that weekends do not count, if you close on a Friday for instance your rescission period is Monday, Tuesday and Wednesday with the loan funding on Thursday. Holidays including Labor Day, Columbus Day, Veteran’s Day, President’s Day, Independence Day, Martin Luther King’s birthday, Thanksgiving, Christmas, and New Years do not count against your rescission period.

Knowing your rights as a homeowner is an important part of protecting yourself from abusive lending practices. Mortgage loans are a huge liability and should be treated with care. Don’t ever let a pushy mortgage broker put you in a loan you do not want or fully understand. You have the right do cancel any mortgage during the three day rescission period; just make sure you provide written notification to all parties concerned before the deadline expires. If you elect to cancel your loan I would recommend following up with a telephone call after you provide written notification to the broker, lender, and Title Company.

You can learn more about your rights and the protection provided to homeowners in the United States including strategies for mortgage refinancing without overpaying with my free Underground Mortgage Videos. Check this out today with no cost or obligation.

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What The Heck Does Annual Percentage Rate Mean Anyway?

Robert Regehr — Mon, 13 Aug 2007 17:28:54 +0000

Refinancing your home mortgage loan can be an overwhelming experience for many people. New homeowners are bombarded with acronyms and jargon like APR, ARM, GFE…at times it can be too much to handle. Today I’m going to talk about the Annual Percentage Rate (APR) and the best way to comparison shop mortgage offers when refinancing.

There are many misconceptions and bad advice surrounding Annual Percentage Rate. Many people, including some financial advisors, will tell you that using the APR is the best way to compare mortgage offers when refinancing. While it’s true that Federal Truth in Lending Laws in the United States require mortgage lenders to publish a figure called “Annual Percentage Rate,” there are no standards that lenders are held to when calculating this figure.

So What is Annual Percentage Rate?

APR is a rate of interest expressed as an annual percentage that is supposed to tell you at a glance the costs of borrowing with a particular loan. The intent was to keep lenders honest when advertising their ultra-low teaser rates. Unfortunately, the Truth in Lending Law failed to protect homeowners from abusive lending practices.

The biggest problem with Annual Percentage Rate is that every lender calculates the figure differently and there are no standards lenders are required to follow when disclosing their fees. While it’s true this isn’t the lender’s fault, they certainly use this flaw in disclosure laws to their advantage. Because every lender calculates their APRs differently, relying on this figure to compare loan offers is like comparing apples to oranges and will not tell you which loan is the better deal.

How Do You Shop for a Mortgage if the APR is Useless?

There are several ways to compare loan offers before committing to a mortgage lender. One thing you need to understand about shopping for a mortgage is that you’re relying on honesty of a stranger. Shopping for a mortgage loan is a lot like shopping for a used car. Your salesperson wants you to pay as much as possible for the car because their commission depends on it. The same is true for mortgage brokers, and as you might know from stories in the news or personal experience, mortgage brokers do not have a reputation for being honest people.

There are two documents that you will encounter when refinancing your mortgage that will help you choose a lender. The first is the Good Faith Estimate (GFE). While Good Faith Estimates are flawed like the Annual Percentage Rate and are only as good as your broker is honest, they give you an itemized list of charges you can use to make a comparison. Mortgage lenders are required by law to provide you with a Good Faith Estimate upon receipt of your application; however, most will give it to you in advance if you ask politely.

The Good Faith Estimate leaves much to be desired and many originators omit or misrepresent charges to make their loan offers more attractive. You can keep this person honest using the HUD-1 statement before you sign your loan contract. You should receive the HUD statement at least 24 hours prior to closing. Your mortgage lender is required to disclose everything on this document and if the charges do not come close to what you received on the Good Faith Estimate you’ll need to have a heart-to-heart discussion with the person originating your loan before taking your business elsewhere.

You can learn more about comparison shopping for the perfect mortgage when with my free mortgage refinancing video tutorial. The videos and tools are yours free with no obligation now or in the future.

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How to Spot Hidden Markup When Refinancing Your Mortgage

Robert — Thu, 26 Jul 2007 21:19:25 +0000

If you’re in the process of shopping for a new loan to refinance your existing mortgage, there are several things you need to know about the quotes you receive. Many homeowners don’t realize that mortgage loans are retail products and like anything else you purchase they’re marked up by the “middleman” for a profit. Here are several tips to help you recognize and avoid paying this markup when refinancing your mortgage.

When you request a mortgage quote online or in person the quote you receive should come from a wholesale mortgage lender that broker represents. The wholesale lender determines your interest rate based on your credit and the details of your application and provides this mortgage rate to your broker, who marks your rate up for a bonus. This markup is called Yield Spread Premium and is paid in addition to the origination fees you’re already paying for this person’s services.

The good news is that once you’ve learned how to recognize Yield Spread Premium on your Good Faith Estimate and HUD-1 settlement statement you can avoid paying it. There are several things you need to know in order to pull this off when refinancing. If you’re dealing with a mortgage broker make sure that person actually is a broker, not someone representing a bank. You can do this by asking if they close mortgage loans in their own name, or the name of their company. If the answer to either of these questions is “Yes” you are dealing with a bank and need to find a new broker.

Once you’re certain the mortgage company or broker you’re dealing with represents a wholesale mortgage lender and not a bank, you’ll need to get them to show you the Yield Spread Premium they’ve added to your loan. Most mortgage brokers will be extremely reluctant to disclose this markup of your mortgage rate because the commission they receive for overcharging you represents a significant portion of their income.

Your mortgage broker is legally obligated to disclose Yield Spread Premium on the Good Faith Estimate; however, because this document is just an “estimate” you will probably not get an accurate representation of the markup. The actual markup of your mortgage interest rate appears on the HUD-1 settlement statement. Yield Spread Premium is usually disclosed in the neighborhood of lines 810-812. Many mortgage brokers have clever ways of disguising this markup. You might see it called “broker rebate,” YSP, or YSP paid by lender. Don’t be fooled…this commission is being paid because your mortgage company or broker is overcharging you for the mortgage.

This so called POC charge or “Paid Outside of Closing” is the legal speak mortgage lenders use to justify the markup. Mortgage broker compensation paid by the lender outside of closing really comes out of your pocket in the form of a higher mortgage rate and payment amount. Your mortgage broker might even try and justify the expense by telling you that if the lender didn’t pay this fee it would end up in the “Cost to Borrower” column. What your mortgage broker isn’t acknowledging is that you’re already paying a perfectly reasonable origination fee for their services. Throw in Yield Spread Premium and you’ve got higher monthly mortgage payments for the next 15 to 30 years.

You can learn more about negotiating for a wholesale interest rate when refinancing your mortgage with my free mortgage toolkit. Register today by clicking the image of a DVD at the top of this page; the toolkit is yours free.

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Is No Fee Mortgage Refinancing a Gimmick?

Robert — Fri, 11 May 2007 22:15:42 +0000

Bank of America recently announced that their no fee mortgage is now available nationwide. Are no fee mortgages simply a marketing gimmick? Before you rush over to the nearest branch there are a few things you need to know about bank originated mortgage loans.

No cost mortgage loans come with above market interest rates to cover the lender’s origination fees and sometimes closing costs. If you read the fine print on Bank of America’s offer they say traditional closing costs still apply; however you will not pay the 1% fee typically charged by the company originating your loan.

The tradeoff is that you accept a higher than market mortgage rate for your loan. Remember the saying “There is nothing new under the sun?” Mortgage lenders have been running scams like this for years only they have a different name for it. When you take out a mortgage from anywhere other than a bank this markup is called Yield Spread Premium.

Mortgage companies and brokers mark up your interest rate because wholesale lenders pay a premium for loans with above market interest rates. They do this because mortgages with above market rates bring higher profits when the loans are sold to investors on the secondary market. Banks charge customers above market rates for the same reason; the difference with a bank is that there is no wholesaler involved with the transaction, only the bank.

Another problem with bank originated mortgage loans is that banks are exempt from the Real Estate Settlement Procedures Act that required lenders to disclose their markup and profit margin on your loan. The Banking Lobby spent millions of dollars romancing Congress to have the law changed so that they’re exempt. (The Republic is beautiful thing isn’t it?) This alone should leave a bad taste in your mouth and is reason enough never to refinance your mortgage with a bank. Bank mortgage rate sheets have this markup, called Service Release Premium, built into them and this should convince you to avoid your bank altogether.

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Comparison Shopping Mortgage Rates Online

Robert — Wed, 02 May 2007 00:09:11 +0000

Before refinancing your mortgage it is always a good idea to shop around for the best mortgage rate; however, unless you go about it correctly you will simply be choosing the best of the worst loan offers available to you. Here are several tips to help you comparison shop and close with the mortgage rate you deserve.

The reason most homeowners do not close with the mortgage rate they qualified is because their loan representative marks up the interest rate to receive a commission from the wholesale mortgage lender. In most cases you’ll never be told this happening and if the markup is disclosed it’s buried deep in your paperwork.

This markup of your mortgage interest rate is called Yield Spread Premium and according to the Secretary of Housing and Urban development will cost homeowners nearly $16 billion dollars this year. Why do mortgage companies and brokers mark up your interest rate? They do this because the markup will double, even triple their profits from your loan.

Here’s an example of Yield Spread Premium in action. Suppose you refinance a $250,000 mortgage at 6.5%. The mortgage broker charges you a point, or one percent of your loan amount, for the origination fees. One percent is a perfectly reasonable origination fee; however, what the mortgage broker isn’t telling you is that you qualified for a 6.0% mortgage rate from the wholesale lender.

Your mortgage broker marked up your mortgage rate because the wholesale lender pays them 1.0% of your loan amount for every .25% they mark up the interest rate. In this example you’ve already paid the broker $2,500 in origination fees; however, with the $5,000 they receive from the lender their total commission for this mortgage is $7,500. Can you see how the mortgage broker is lining their pockets at your expense? Fortunately for you, homeowners who learn to recognize this markup can avoid paying it when refinancing. You can learn more about refinancing your home loan without overpaying with our free mortgage tutorial.

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Theft by Mortgage

Robert — Fri, 23 Mar 2007 00:15:45 +0000

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.

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