Are you in a process of refinancing your loan? If you are, then read on because I guarantee this article will widen your horizon about hidden charges that loan companies rip off from your pockets!
What you DON’T know:
Most mortgages are sold in Retail prices. Are you wondering why it is called retail? Well, in plain business, when you manufacture in bulk, there will be people who would wish to sell your products in retail; expecting commission by doing so. Now when a company allows people to re-sell their products in retail, then they are required to grant them incentives as payment for their service; that’s exactly how mortgage premiums are higher when you don’t know anything about these companies dirty game!
Ending up paying for a third party’s commission is absolutely necessary. All you need to know is how to play the game and give them a dose of their own medicine! Knowing about the benefits of a wholesale mortgage will save you from overspending over unnecessary added rate!
What to DO:
In order to have assurance that you will not be paying any unnecessary payment for a loan that is meant to assist you in you in your needs, you must avoid banks completely. This is because banks will give you a higher rate to profit from you as they sell your loan request to investors that are willing to provide you with the loan you need. Now, when banks give your request to a secondary market, the bank will receive a mark up that is called a Service Release Premium as payment for making you acquire a loan from them.
Aside from avoiding banks, you should avoid mortgage companies and brokers that add a yield spread premium in rate quotes they present. This is because like the service release premium, yield spread premium is also an additional rate that you are required to pay for the entire period you will hold on with the loan. This additional rate will be given to the lending company and the broker behind the loan; worse part is, they will make up reasons to convince that what you’ve paid for is your actual loan cost and the evidence of the trickery will be buried in your loan paperwork without you having a single idea about it.
The Bad News:
There are banks and loan companies that will suck money from you like leeches if you will let them.
The Good News:
If you are aware about yield spread premiums and service release premiums then you can avoid these unnecessary charges from being taken from you! There is a wholesale mortgage option that you can avail of. Wholesale mortgage is cheaper than most marketed loans because there is no commission that you will be paying in addition.
When you are scouting companies, make sure you tell them that you know about yield spread premiums and you do not want to have a mortgage with this additional rate. Believe me, any decent company worth having business with will give you a better deal.
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