Wednesday, July 18, 2007

 

No Fee Mortgage? - real facts you need to know!

the real truth!!!


Ok This is what NO mortgage banker ever wants you to know ----Mortgage money is purchased from wholesalers just like any other product. Whether you are a lender or a broker, there is still a cost at what you can get the money for. Here is how it works:

I get your loan approved and shop several different investors for a price. Lets say I can get your financing done at a rate of 6.5% after shopping my investors. This is where it gets a bit tricky. I can charge you “points” and give you the loan at 6.5%. OR I can charge NO points and give you the loan at 7.25%. The difference in the rate is called yield spread premium. What that actually translates into is a very big commission to the originator. Very simply, it is wholesale vs. retail.

Please keep in mind that the really, really big lenders have huge overheads and typically need to mark their interests rates even higher to cover their overhead, commission to the loan officer, etc… This is where a smaller broker has a huge advantage. They simply do not have the same overhead and expenses as the big names and can pass that on in the form of a smaller mark up to the interest rate.

Remember that other factors go into obtaining the best interest rate. Credit of course plays a big role as well as loan-to-value and your debt ratio. Give me a call with any mortgage related questions.

And most of all always remember, if the deal looks too good to be true, well, nobody does anything for no cost.

Lewis Poretz
President

Labels: no cost mortgage, No Fee Mortgage

posted by Lewis Poretz  # 7/18/2007 12:19:00 PM

 

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