Banks vs. Mortgage Brokers
Many people think they can avoid paying mortgage broker fees by refinancing their home loan with a bank. After all, your bank is a direct lender right? Unfortunately banks are just as guilty, if not more so of overcharging their customers as mortgage brokers. In fact, the Banking Lobby in the United States spent millions of dollars having the disclosure laws changed to exclude banks. That’s right; your bank is exempt from the Real Estate Settlement Procedures Act and is not obligated to disclose their profit margin or markup on your home loan.
Bankers are now also in opposition to Obama's proposal to create a 'Consumer Financial Protection Agency' to regulate mortgage lending and protect conusmers from financial abuse. On the other hand, the National Association of Mortgage Brokers (NAMB) is waiting to see how the legislation plays out. This legislation would put banks at a level of transparency that mortgage broker's have been abiding by for years. According to NAMB executive VP Roy DeLoach "The NAMB applauds provisions calling for all originators to disclose all direct and indirect income". We agree with NAMB and while botched legislation has the potential to hurt consumers by limiting choices, it would be nice to see the playing field evened out. In the mean time, consumers need to stay vigilant and educated about the choices they have today.
As a mortgage broker we have access to wholesale rates and we are willing to work for a flat origination fee. Much like your bank, we can mark up your mortgage rate for a commission from the lender. This commission is known as Yield Spread Premium but as brokers we are obligated to disclose the rate markup and we often use this as an alternative to paying up front fees. When you hear the term "no cost", this is in reference to paying the fees as yield spread, rather than up front. It works like a seesaw, higher rate/lower fees and vice versa but you can see your options clearly and you have the choice to balance your loan to meet your needs. It is also possible to refinance your mortgage paying a flat origination fee without markup of your mortgage rate. This is a deal that is tough to get from your bank or credit union and will save you thousands of dollars every year you keep the loan. Working with a mortgage broker like Primestar, you can be sure that everything is disclosed to you about your loan upfront.
Educating our clients + complete transparency = TRUST! https://www.bbb.org/online/consumer/cks.aspx?id=10407098525144643
Thursday, July 16, 2009
Wednesday, July 1, 2009
How much is your house worth & sustained growth indicators
We had a nice downward trend in rates last week after the Fed announced that they they left their target rate at 0% to 0.25% and the continuation of their previously announced $800 billion dollar purchase of US Treasuries as well as the previously announced $1.25 trillion dollar purchase of MBSs by the end of the year.
We have another big week in announcements including the Unemployment rate tomorrow so we can expect the volatile rate environment to continue for the time being. After last months report from National Association of Realtors (NAR) indicated that existing home sales showed the first month over month increase since September of 2005, a report today shows that the pending home sales rose .1% during the month which is up 6.7% compared with May surprising prognosticators who had forecast no growth.
In May, existing SFR, Townhomes, condos & co-ops rose to an annual rate of 4.77 million units which was a 2.4% increase from 4.66 in April. Keeping with this (hopeful) trend, the U.S. Census Bureau separately reported the median sales price of new homes rose to $221,600 in May which is a 4% increase from April.
All this activity is good news as climbing out of the housing crisis is the first step to an overall rebound. People who are looking to refinance with today's low rates are left wondering how to determine what their home is now worth. It's a good question and today there are really two markets; the distressed foreclosure market and the ordinary market. In the current environment it has been difficult to distinguish between the two when home appraisals are often based on values of foreclosed properties, which sell for significantly less than homes of ordinary sellers.
Distressed homes usually sell for around 20% less than normal homes in the same area, but unless the appraiser takes the time to make this distinction, a traditional home can get lumped in with the bargains. Appraisers are required to use comparable properties that have sold recently, and if there is nothing but distressed sales, what is left to compare to? Is your house worth more because you paid your mortgage on time? We'd like to think so but in a less than ordinary market, it's very difficult to prove.
Still the indicators for recovery are there. NAR's affordability index is near historic highs because with the combination of low housing prices and low rates, the average family is required to devote less of their income toward the mortgage. This should continue to have a positive effect on demand and although the market is not likely to rebound very quickly, we should begin to see a gradual recovery.
To access our custom instant rate quote go to http://www.goprimestar.com/Search_20_Rates.html
We have another big week in announcements including the Unemployment rate tomorrow so we can expect the volatile rate environment to continue for the time being. After last months report from National Association of Realtors (NAR) indicated that existing home sales showed the first month over month increase since September of 2005, a report today shows that the pending home sales rose .1% during the month which is up 6.7% compared with May surprising prognosticators who had forecast no growth.
In May, existing SFR, Townhomes, condos & co-ops rose to an annual rate of 4.77 million units which was a 2.4% increase from 4.66 in April. Keeping with this (hopeful) trend, the U.S. Census Bureau separately reported the median sales price of new homes rose to $221,600 in May which is a 4% increase from April.
All this activity is good news as climbing out of the housing crisis is the first step to an overall rebound. People who are looking to refinance with today's low rates are left wondering how to determine what their home is now worth. It's a good question and today there are really two markets; the distressed foreclosure market and the ordinary market. In the current environment it has been difficult to distinguish between the two when home appraisals are often based on values of foreclosed properties, which sell for significantly less than homes of ordinary sellers.
Distressed homes usually sell for around 20% less than normal homes in the same area, but unless the appraiser takes the time to make this distinction, a traditional home can get lumped in with the bargains. Appraisers are required to use comparable properties that have sold recently, and if there is nothing but distressed sales, what is left to compare to? Is your house worth more because you paid your mortgage on time? We'd like to think so but in a less than ordinary market, it's very difficult to prove.
Still the indicators for recovery are there. NAR's affordability index is near historic highs because with the combination of low housing prices and low rates, the average family is required to devote less of their income toward the mortgage. This should continue to have a positive effect on demand and although the market is not likely to rebound very quickly, we should begin to see a gradual recovery.
To access our custom instant rate quote go to http://www.goprimestar.com/Search_20_Rates.html
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