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