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Mortgage Refinancing > Mortgage Refinancing: Avoid Falling Into The Trap Of Mortgage Banker And Brokers' Sales Pitch
Mortgage Refinancing: Avoid Falling Into The Trap Of Mortgage Banker And Brokers' Sales Pitch |
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Mortgage refinancing lenders are basically salesmen who make a hefty commission from lending you money for buying a house. One of the biggest mistakes customers make while completing a home loan is being only concerned with the cost of completing the loan and the final monthly payment. Bankers and mortgage refinancing brokers do not always offer the best possible interest rate because they make money when you get a higher interest rate than the market bears. What the average homeowner or homevbuyer fails to realize is that bankers, loan officers, mortgage brokers, or whatever your mortgage refinancing lenders call themselves, are basically salesmen. Certainly, if you purchased your home from a realtor and took help from the lender he suggested, you most likely got a feeling of trust in that people, because the realtor referred him. Beware of this potentially dangerous water. Suddenly, the banker is someone who will help you. Now, your friend. The intention here is not to scare you into thinking that everyone in the mortgage refinancing business is a bad people, looking to rip you off. But don't trust bankers just because a realtor sends you there. Remember, they work together. The realtor needs the sale, and the banker needs to make mortgage refinancing loans. They are both salesmen, and salesmen are people who make commissions, based on a particular price. This goes for loan officers, just the same as it goes for a realtor or a car salesman. That used car salesman makes more if you pay more, and the mortgage banker makes more, based on how high your interest rate is. Unfortunately, most Americans live from one payday to the next, barely paying the bills, so all they're concerned with is what the monthly payment will be and if it will fit their budget. Bankers feed off of this, as it becomes easy to simply fit a loan into a payment schedule, ignoring interest rate, altogether. In fact, most people make it easy on the mortgage refinancing broker, asking more questions about payments than about interest rates. The unsuspecting borrower will say, I can't pay more than $1,000 per month. The cunning loan officer will feast on this people, like a starving man at a Thanksgiving dinner. Remember, bankers and mortgage refinancing brokers keep secrets, advising in ways that appear to save you money but really cost you thousands in the long run. Think about it; if you said you could afford no more than $1,000 per month, and the people, in whom you placed your trust, told you your payment would be $895, you'd probably be pretty excited, huh? What has really happened, though, is the mortgage refinancing broker has done the borrower, his valued customer, a great disservice. Why, you may wonder. Because the market for this model bears an interest rate of 6%, and we're assuming the borrower has good credit. The loan officer could have offered the far better 6% rate, which would create a payment of $829. This is $66 less than the borrower's payment at 7%. Also, the 7% rate will cost the borrower an extra $792 each year ($66 times 12 months). That is nearly $4,000 over five years! All this, just so the mortgage refinancing broker could pocket a few hundred dollars more on this one deal. If the loan amount was much higher, you could lose tens of thousands of dollars in just a few years. Bankers and mortgage refinancing brokers do not always offer the best possible interest rate because they make money when you get a higher interest rate than the market bears! So, be careful of this old trick. Tell your mortgage professional that you want the Par rate. This is the best rate the lender is willing to offer on a given day, without charging a premium. In other words, you could get a better rate, but you'd have to pay to get it. Now, if you are caught off guard and sold a rate that is greater than Par, your payment will be bigger and the loan officer will make extra money. Don't let that happen. |
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