Are you considering using a home loan mortgage broker to refinance or purchase your home? Many people ask me which bank is best to get their home loan from; however, my answer might surprise you. If you want the lowest mortgage rates without unnecessary markup and junk fees you need to find the right person, not a bank to arrange your mortgage loan. Here are several of my best tips to help you find the right home loan mortgage broker without paying junk fees.
Banks vs. Your Home Loan Mortgage Broker
There’s a reason I don’t recommend banks when it comes to home mortgage loans. The main reason is thanks to the banking lobby banks are exempt from key disclosure legislation in the United States that protects you from predatory lending practices. The banking lobby spent millions of dollars lobbying Congress to have the Real Estate Settlement Procedures Act (RESPA) changed to exclude banks, giving them an unfair advantage when it comes to hiding their profit margins and fees on your home loan. In fact, this loophole is so big all your bank is required to give you is a Good Faith Estimate and an Annual Percentage Rate (APR) based on the lowballed fee estimates they’ve provided you. The Good Faith Estimate you receive from lenders is little more than a work of fiction suitable for lining your cat’s litter box. Home loan mortgage brokers are not exempt from RESPA and are required to disclose their profit margins, markup and fees on a HUD-1 Settlement Statement 24 hours prior to closing your home loan.
Finding the Best Home Loan Mortgage Broker
Most people shop for a new home loan the same way they shop for kitchen appliances. If all you do when shopping for a new refrigerator is call appliance stores and choose the one with the lowest price then all you’ve accomplishing is to get the best retail price for your money. Everyone knows wholesale prices are the way to go when it comes to appliances and the same is true when it comes to home loans. Home loan mortgage brokers have access to wholesale rates and if you find the right one to arrange your next home loan you can walk away from the closing table with a wholesale rate without paying any junk fees. The trick is how to find the right person to arrange your home loan.
Mortgage Origination Fees & Yield Spread Premium
If you want the best home loan mortgage broker for the job you’ll need to understand how these brokers are compensated for their work. Most home loan mortgage brokers charge an origination fee for their services. This is a flat fee you’ll pay at closing which appears on your Good Faith Estimate and HUD-1 as a loan origination fee. One percent of your home loan amount is a perfectly reasonable fee to pay for your broker’s work. Unscrupulous home loan mortgage brokers collect a second fee from the lender known as Yield Spread Premium. This fee is paid to any loan originator that locks and closes your home loan with a higher than necessary rate. Mortgage lenders publish rate sheets that include varying amounts of Yield Spread Premium and shady brokers quote rates based on what they think you’ll pay, not what you should be paying.
This used car salesman’s tactic is the reason that nearly all of your neighbors are currently overpaying for their home loans. They’re overpaying thousands of dollars because they trusted the wrong person to arrange their home loan and that person took advantage of them.
You can learn more about finding the right home loan mortgage broker and getting a wholesale interest rate by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample that shows you how mortgage lenders are fleecing American homeowners out of sixteen billion dollars this year alone…
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.
