If you are in the process of getting a mortgage and you can’t answer these questions, YOU ARE AT RISK:
- What is the PAR interest rate for the programs you qualify for?
- How much is your broker making on the front and back ends of your deal?
- What is the definition of YSP? I don’t care who’s handling your mortgage or how much you trust him, if you don’t know what PAR rates are or how much he/she id being paid,
YOU ARE A FOOL.
Odds are, you’ve never been quoted the actual rates/terms you qualify for and have no idea how much your loans are really costing you. Why? Because the system is broken.
Lenders pay brokers a handsome commission for selling you interest rates that are higher than what you really qualify for (above PAR). It’s called yield spread premium (YSP) and it’s just one of many ways the industry turns your money into their money.
The law requires brokers to disclose YSP, but it’s usually beyond the average consumer’s ability to detect it. Bankers, on the other hand, don’t have to tell you—which is why knowing your PAR rate is so important. Without it, there’s no way to figure out what your loan is really costing you, both short and long-term.
LET’S BE HONEST, WE LIVE IN A DEBT-DRIVEN SOCIETY.
We are so dependent on debt that if everyone were to miraculously get out of it, the economy would implode. The truth is, if used properly, debt can be a powerful tool— especially when it comes to real estate.
The problem isn’t debt, it’s the matrix behind how it’s sold and serviced. For far too long, the lending industry has ignored, if not encouraged, the systematic exploitation of consumers with interest rate manipulation, fee gouging and loan steering. I know all this because I ran a successful mortgage company and fostered the start-up of many more.
Here are two important facts you need to know:
• LOAN ORIGINATION IS NOT AN ART. Sure, there’s plenty of “creativity” involved in getting you to over-pay for your loans and come back for more every time you re-fi, but in this business, there’s a fine line between marketing and manipulation.
• LOAN ORIGINATION IS NOT ROCKET SCIENCE. The truth is, mortgage brokers do nothing but gather info, plug it into a form, and then decide how much of your money they want to take. Loans boil down to risk-based calculations made by the lenders, who simply quote rates and terms based on information gathered by a broker and packaged in the way that benefits him the most. We’re talking thousands, even tens of thousands of dollars taken right out from under your nose.
Don’t let a mortgage broker or banker convince you of otherwise. Ask targeted questions, don’t be afraid to call out your broker/banker if you know/think something isn’t right. If you still can’t get straight answers contact me and I will be happy to get involved, or simply direct them to theXbroker site. Once they understand that you understand….the gig is up.
