Archive for the 'Closing Costs' Category
Lenders Are Not All Created Equal July 21st, 2007
Alice Roe of US Bank spent quite a bit of time on the phone with me today after yesterday’s blog post. Alice lives in Arizona but specializes in Alaskan loans. She straightened me out on a few things.
First, I was wrong that a mortgage broker’s compensation is not disclosed. Alice said that it is disclosed on the settlement statement but often no one pays any attention to it because it is not shown as a cost to either the seller or the buyer.
She also pointed out something very important that I should have spent more time on.
That is the fact that it isn’t so much the amount that your lender is paid, but what they can deliver to you that is important. Loan professionals are not commodities. By that I mean that they are not all created equal.
For example, pork bellies are a commodity. If you invested in a shipment of pork bellies from the Chicago Mercantile Exchange, hopefully you would sell them before you actually took delivery. But if you couldn’t get them sold in time, you should be pleased to know that the 20 ton shipment of pork bellies delivered to your front door meets all the qualifications of every other 20 ton shipment of pork bellies. It’s a commodity that you can count on.
It isn’t true that one loan professional is the same as the one in the next office. Some have more experience and can find a good loan for you when others might not. Some will think about the fact that you know people, who know people who will send their friends to them if they treat you right. Some don’t really care and only are interested in the fact that they can make money if they get you a loan.
You should find a lender that can really help you. Ask your friends, ask your Realtor, ask your family about people that have helped them find a good loan at a fair price.
Or course Realtors are not commodities either. If you are looking for someone that will listen to you and not just try to sell you something give me a call (907 232–7900), or drop me a note.
How Much Does That Loan Cost? July 19th, 2007
Back in the early 90s when I first started in real estate someone thought it would be a great idea to train real estate agents as mortgage loan brokers as well. The thought was to have a one stop office. Lets just have them find a house and get their loan from the same person.
I was brand new in real estate and the obvious conflict of interest didn’t even occur to me so I signed up. I took the training and learned a lot about how mortgage brokers work and how they make money. It was the making money part that made me decide to step back out of it.
But I did help two friends refinance their home. They got unbeatable loans because I personally and purposefully didn’t make a dime on the deals. I did not charge them any loan fees and priced their loan at par, which was the lowest interest rate quoted to me by the company. Basically, they got the wholesale rate.
I learned that mortgage brokers have a lot of control over how much money they make on each loan. They can charge fees to the borrower that are shown on the good faith estimate and on the settlement statement AND they can make money on the “back side” of the loan that is not disclosed anywhere.
It is very possible that a mortgage broker could charge no up front fees at all on the loan and still make more money that another lender who charged a 1% loan origination fee. According to Karen George in Arizona it is possible to make as much as 5% on a conventional loan. In fact even more can be charged for a sub-prime loan. Most of the local lenders don’t make anything close to this amount, but they should still tell you how much they are charging.
Why is it important to know how much your lender is making? Because YOU are paying the bill. The money that is going into the lender’s pocket is coming out of yours even if you don’t know it. I think people should be paid for the work they do, and they should be paid fairly. But I think it’s fair that we know how much we are paying for a service.
Most but not all of the local lenders I talked with were very defensive when I asked them how much they made on their loans. Apparently most of the local mortgage officers, (as opposed to mortgage brokers), don’t have much control over how much they are paid. But they still didn’t like talking about it.
There were two people that did seem open about discussing this with their clients. These were Tara Murdoch-Barnes and Kirsten Forbess of Alaska USA Mortgage, (352–8306).
If you have read this far, it means you are interested in this subject. If so, check these two websites out that were recommended by a local loan officer friend:
Some may say ‘what’s good for the goose is good for the gander”, how much are real estate licensees paid? I’ve discussed that before in commissions. But there are some things most people don’t know about how Realtors are paid and that is a subject for tomorrow’s blog post.
Who Should Pay For The Appraisal? February 23rd, 2007
Closing costs always seem to be a mystery.? Most people say we will just split the closing costs 50/50.? But it?s not that easy! There are certain costs that are traditionally seller?s costs, and certain that are traditionally buyer?s costs.? In?some loan programs it is mandatory that the sellers pick up certain costs. Here are the costs usually paid by the buyer:
- All Loan Fees. These include commitment fees, origination fees, points, credit reports, and lock fees.
- Mortgage insurance.? Or VA funding fees, or rural development fees if required.
- Reserves account.? This is to pay the taxes and insurance as they come due.
- Lenders title insurance.? This is not the Owners Title Insurance paid by the seller
- Home owners insurance
- Inspection fees.? For their home inspection
- Flood review Read the rest of this entry »
Marty Van Diest, Tele 907.232.7900 / marty[at]valleymarket[dot]com
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