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Mortgage Brokers-yes You Can Negotiate With Them Bargaining and give and take have been sewn into the fabric of how we interact with each other. We do it most of the time without even knowing it. But there are those times when we may not have the confidence to do it because what we may be dealing with may be really unknown to us.
A particular situation where this is likely to happen is when there is money involved; mainly in the case of buying real estate and procuring a loan. That's because getting a is often frightening which causes us to seek someone qualified to help us; a loan broker perhaps.
Our belief goes toward a broker's skill and expertise and we rarely second guess when it's time to pay this cost or that fee. We just want to believe what our home loan broker tells us to.
What genius said that it was wrong or unwise to try to cut the best deal for us with our money broker?
Has there been some shortage of brokers to the point where we have to listen to everything they tell us to do?
Certainly not, in fact we hold the power to find and employ the services of the broker that fits our needs. What may ultimately help us regain our negotiating footing with brokers would be knowing some particulars about the profession itself.
At the top of the list is the fact that a broker is no different than a car salesman who wants to get your money. They hold their interests in higher regards than they do yours and they are certainly not going to reveal the secrets that could keep money in your pockets by putting less in theirs. Of course, if you knew how to negotiate with them you would be at an advantage.
Something else to think about may be the fact that some brokers are actually broker-bank. This means they loan their own money for your mortgage. Why is this important because as a bank they don't have to abide by the Real Estate Procedures Settlement Act. This could leave you very exposed is some discrepancies were to arise in your real estate transaction.
A true broker works with a variety of wholesale lenders all for the purpose of finding you the
Proposed RESPA Reform
Mortgage brokers may have some intrusive rules from HUD to deal with.
When I read the news on HUD?s proposed reform of the Real Estate Settlement and Procedures Act (RESPA) I was skeptical. Cathy from Sequim challenged me to read the 96-page federal register document so we could all figure out what?s going on. I am here to tell you that there is one very good change coming out of this proposal. In fact, it?s so good that I am borderline hopeful that this change might do what legislation is suppose to do and what HUD forgot to do when they signed the original version of RESPA in 1974. But first, the changes that will have many, but not all mortgage brokers screaming bloody murder:
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Neocon-omics
How much can the Fed and the U.S. government do in the face of declining housing prices?
That?s been my worry since I saw the housing bubble peak in 2005. Historically, declines in housing prices take 3-4 years to bottom, which means we still should be at least half a year away. But after that, the economy doesn?t rebound instantly. It yo-yos for a bit - essentially running horizontal.
Fannie Mae and Freddie Mac have entered into cooperation agreements with New York?s attorney general to only purchase loans that meet a new home valuation protection code, the state announced. The code is effected on Jan. 1, 2009. Under the new code, mortgage brokers and loan originators are prohibited from choosing or communicating with appraisers.
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Choosing Second-best
How to leverage your second choice into seller concessions and a better deal.
So, rather than competing for the best house and paying top dollar, you can use it as leverage to get a lower price and seller concessions on a home that could be even more ideal for you ? after you do a little work.
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Price Depression
A forecast for more housing price depression.
My theory is that housing prices will continue to wilt as long as large levels of foreclosures and new home inventories run high. These are not traditional homeowners, and are motivated to slash prices, thus continuing to depress prices.
You should try to get pre-approved by a lender prior to shopping for a home. A pre-approval is a strong marketing tool when making an offer that may contain many a number of seller concessions. Telling a seller that you are already approved for a loan makes the acceptance of a low offer or one where he may be paying the closing costs much more palatable.
US News and World Report implies (hopes?) we may be nearing a bottom in housing prices but with a mountain of resets coming in the next few months, it?s difficult to see how a bottom can be seen or even predicted.
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Strike One
A look at role of mortgage insurance in FHA loans.
Regarding the second point: By not raising the loan limits they fail in one of the 11 ways they can help. I believe they will fail in almost all, but let us have hope. To be specific as to why I support this: FHA is not a government gimme. It is a government guarantee the mortgage will be paid or the lender compensated for losses. The program pays positive cash flow to the government in that there is a type of mortgage insurance fee charged the borrower. It is reasonable and more than pays for the reimbursements made to the lenders that suffer a default.
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Who's To Blame
Mortgage brokers share the blame with the rest of the industry in the current real estate mess.
Who is not to blame for the mortgage mess? Take one step back. As lenders, money was flowing from the spigot like there was no tomorrow. As mortgage brokers, there was money to be made by cranking the faucet, and it was a foot race to see who could get to the sink first. As agents, we sang the ?Houses are expensive, but money is cheap? refrain until we were blue in the face. And, as for the consumer, it really doesn?t matter in the final analysis whether they were motivated by necessity, opportunity or unadulterated greed. We all helped make this bed in which we now must lie.
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Trying To Move
Hard to move when you're house loses value.
I will continue to work from Los Angeles while we work on selling our house, which unfortunately is bad timing as housing prices have taken a bit of a dive around here. Once we have things settled over here, we?ll pack our things and move up to Seattle.
What else can you say to such a ridiculous report, such obvious sensationalism? The sad thing is, many people will read this wild hyperbole and imagine that the TV station?s salacious report has a ?point? to it.
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Home Buyers Returning This Fall
This blogger says lower mortgage rates will drive buyers to the residential real estate market soon.
Ten days ago after the Fed calmed the markets' credit panic with a 1/2 point cut in the Discount rate, I postulated that home buyers will come back this fall when the Fed finally drops the Fed Funds rate, and mortgage rates drop. It's now almost certain to happen. Here are the parameters in play now:
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Lead Scrub Rates
A look at the cost of a lead for a mortgage broker.
Joel has a good interview with Dave Wengel of TargusInfo around Mortgage lead scrub rates. Specifically that lendingtree and lowermybills have a 15% scrub rate whereas the free ipod guys (lure people in with promise of a free ipod but they and their friends have to signup for credit cards, netflix and talk to mortgage brokers to get it) have around a 50-60% scrub rate.
Having been an FHA lender I can attest it is a pain at times. FHA requires annual financial audits of the mortgage brokers financial condition and more. We always have survived the several day pain, and the expenses tied to it, but only FHA drags brokers through this. The actual banks that sponsor the mortgage broker go through even more red tape and grief. Loan officers have to know more rules. FHA doesn?t rely on the easy automated underwriting or the quick answer from a subprime lender. FHA restricts how the borrowers pay for certain expenses and how much the lender can charge.
best deal on a mortgage. A broker that balks at you being knowledgeable about what you want should quickly see the broad side of your back as you leave their office.
Consider focusing on two key things that could save you a little money in the acquisition of your home loan. First, try to negotiate with your broker to pay only one to one point five percent of the loan amount in origination fees. Try to couple that with only paying about $400 in loan processing fees. This should help lower the overall cost of getting your home mortgage.
Your money broker could easily agree to this knowing that they could possibly make money from you in the form of the yield spread premium. The "YSP" is a markup added on by your broker to the interest rate on your mortgage. This is the real way some brokers make their cash and you should not pay this if you can negotiate with your broker.
Now you have at least three negotiating points to bring up with your broker. Use them and others wisely to make sure that after buying your home you still have a shirt.
Author Lester Lavar Pitts provides advice for those looking for a dallas broker or one from somewhere else. Receive a totally free mortgage gift when you visit our site to learn more about mortgages.
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