True Costs of Mortgage Revealed
October 18, 2007 – 10:59 am
How would you like to see the REAL cost of a mortgage? Now you can!
To give a simple example: Let’s say you go to Walmart to buy a gallon of milk. The price tag would show you how much Walmart paid for the milk. $3.50. When you get to the cashier and close the transaction (buy the milk), the cashier asks for $4.00. The cashier says “We charged you our cost plus a flat and fair fee of $.50 for the services we rendered to you today.”
This is exactly what FireDream will do in closing a mortgage for you. We don’t charge an origination fee (typically 1% of the loan amount) which on a $300,000 mortgage would be $3000. Many mortgage providers (mortgage bankers or brokers) also charge additional fees, like courier fees (even if one is not used) or some type of administrative fees which are pocketed by the mortgage banker or broker and adds to your cost.
Now for the BIGGIE! The higher the interest rate a mortgage banker/broker can SELL you, the bigger the payoff is for them. As an example, if you really qualify for a 6% interest rate on the wholesale rate sheet (which by the way we show you) a typical mortgage banker/broker will offer you a 6.5% rate or higher. At the closing of the loan the wholesale lender would then pay the mortgage banker/broker an additional 1% to 2% of the loan amount. Illustrating this on a $300,000 mortgage loan it would cost you an extra $96.29 per month or $1155.46 per year and $34,663.74 assuming a 30 year mortgage.
In the subprime lending hay days of yore the extra payoff to the mortgage banker/broker could have been as high as 5% of the loan amount.
So what is our story? We don’t charge an origination fee or junk fees, nor do we try to SELL you a higher rate than you qualify for! So what do we charge? We charge a fair and flat fee for our services to close your transaction (loan). When you get to our “cash register” to close your loan you get a fully disclosed cost (Walmart milk example) on the day you lock your loan (lock your rate with the lender) plus a fair price for the services we render.
For a more detailed explanation of how the mortgage industry works go to The XBroker.
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3 Responses to “True Costs of Mortgage Revealed”
No cost mortgage refinance, under standard circumstances, will result in an average monthly payment of $150 more per month, than if you were to go with a traditional refinance loan. Just because you are saving in upwards of five thousand dollars upfront, doesn’t mean that you are actually saving money.
By Carolina Mortgage Makers on May 25, 2008