Considering Internet Mortgage Lenders to refinance your existing home loan? The Internet is an excellent tool for comparing loan offers; however, there are a number of hidden fees that could quickly turn that sweet Internet mortgage rate quote into a financial nightmare.
Here are several tips to help you find the right Internet Mortgage Lenders without paying junk fees or markup of your mortgage rate.
What Are Internet Mortgage Lenders?
Most websites you find on the Internet fall into one of two categories: lead generation and broker banks. The Internet giants like Lending Tree involved with lead generation actually have nothing to do with mortgage loans whatsoever. You might be surprised to learn that all Lending Tree does is run a glorified lead generation site with an enormous advertising budget. That’s right, all Lending Tree does is collect your contact information and financial details and sell your information to the lenders and brokers in their “network” for a premium fee.
Beware Computerized Origination Fees
Did you know that if you refinance your mortgage with one of the lenders in Lending Tree’s network you will be charged a “computerized loan origination fee” of up to $1200 on your Good Faith Estimate? This is how mortgage companies and brokers pass Lending Trees lead generation fees on to you the consumer. Should you have to pay this ridiculous junk fee just so Lending Tree can turn an enormous profit? Of course not. There are hundreds of honest and hardworking mortgage brokers in every market willing to work for a fair loan origination fee without marking up your mortgage rate for fun and profit.
What About Mortgage Broker Banks?
Mortgage broker banks are another evil most homeowners are not familiar with. The Banking Lobby in the United States spent millions of dollars lobbying congress to be exempt from the Real Estate Settlement Procedures Act which requires mortgage brokers to disclose their markup and profit margin on your home loan. Because banks are exempt from this legislation and fund their loans with the bank’s money you’ll never know the bank’s margin on your loan or how much they’ve marked the rate up over a par or wholesale mortgage rate.
Mortgage broker banks were created to take advantage of the loophole in the Real Estate Settlement Procedure Act and are simply a mortgage company or broker that closes and funds loan in its own name. eLoan is an example of an Internet Mortgage Lender that closes in its own name and is therefore not required to disclose how much they’ve marked up your mortgage rate for a profit. Take out a mortgage loan from a mortgage broker bank and you’ll never know how low your mortgage rate could have been…
How to Avoid Mortgage Broker Banks
Broker banks are easy to avoid when refinancing your mortgage. Simply ask your mortgage broker or loan representative if their company closes in the name of the wholesale lender or their own company. If they close in their own name you know you are dealing with a broker bank. There is only one reason for a mortgage company to operate as a mortgage broker bank and that is to take advantage of the loophole created by the banking lobby to exploit homeowners. This is not the type of company or mortgage broker you want to do business with.
Honest Mortgage Brokers Are Not Hard to Find
The ideal mortgage broker is self-employed with at least five to ten years experience. Find one working out of their home? Even better. The reason this makes for the perfect mortgage broker is the small time self-employed brokers do not employ expensive sales staff or pay for posh office spaces. This type of broker is much more likely to give you a good deal without marking up your mortgage rate for a commission. You can learn more about refinancing your mortgage without paying too much by registering for the free videos available on this website. Register today and you’ll receive a list of mortgage brokers in your area that do not mark up mortgage rates for a commission, allowing you to take advantage of wholesale mortgage rates.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
