All March Long!
Use me for
your next mortgage in March 2008, whether for a refinance or a
new home purchase, and get and get a $300 gift certificate*
from Econo Furniture in Gilroy, CA.
If
you're from out of the area (as in more than 50 miles from
95020),
write me
for details on the substitution gift.
*Cannot be
combined with any other offer.
About My Fee
I'm very honest about my fees and I'm utterly transparent
about them. I charge 2 points for my services as a mortgage
consultant/planner. I don't typically discount my fees
to get a loan or haggle over price because I never provide
less services to my clients - ever. If I were selling
widgets, I could provide a cheaper widget for a lower price
for those who wanted it or offer self-installation to save on
install fees... but a mortgage is different. There's
nothing I can take away from my services in order to give a
client a lower price. There's nothing a client would
want me to take away.
The bottom line is that regardless of how much the fee is,
a client will want 110% from me. It would be unfair to
expect 110% from a person while paying them
less than 100% of their pay. If you're shopping for a
mortgage, you want someone who will advocate for you and look
out for your best interests, someone you can trust not to
screw you or hide important details from you, someone with
scruples who will serve you with the utmost professionalism.
It makes no sense when people try to screw their professional
while trying not to get screwed. Would you want a
bargain accountant or attorney? Why on earth would you
want a bargain mortgage consultant?
A mortgage is a
significant transaction. In fact, it's one of the most
significantly impacting transactions you'll make in your
lifetime. Isn't it one of the more important things in
your life? Your mortgage isn't just an
interest rate or a term - it's your monthly payment obligation
on your home. That's too important to mess with.
It should be as important to your mortgage consultant as it is
to you.
On each and every loan, I work hard to make sure it's a smooth, honest, headache-free
transaction for all concerned. I never gouge my clients
or charge hidden fees. I'm honest about making my 2
points and I'll show you where they are in the paperwork.
Despite outrageous fees you may have been charged by other
mortgage professionals in the past,
the standard fee for mortgage consulting services is 2 points.
You should see 2 points or less in under "origination fees" in
your good faith estimate (on my loans anyway... you may see
something else when buying loan products from someone else).
I'm like a super hero saving you
from financial ruin...
Okay, maybe the super hero thing is a little dramatic, but
many days that's
how I see myself. There were some loan officers in the
industry that got greedy in the last few years and that's
primarily why we're seeing so many foreclosures right now. Not only
did they put a whole bunch of people into loans who truly
couldn't afford them, but they charged these poor folks
outrageous fees for doing so. I wasn't in the mortgage
business then, but I got into it because I heard so many
complaints about crooked loan officers. I wanted people
to have an honest person to work with.
You should know...
It is illegal
for you to be charged more than a total of 5 points in a
transaction - that includes front and back ends of the deal.
Does that mean I'm going to try to charge you 5 points for
origination or sneak them in somewhere? NO. All I
want is my 2, but there are other things that contribute to
how many points you're charged and I wrote this article
specifically to explain them to you.
What's a "point"?
A point is 1% percent of the loan amount. 2 points
equals 2% of the loan amount. For example, if a loan is
$500K, a point is $5K. 2 points would equal $10K.
Did I just make $10,000? Nope.
In the mortgage industry, just like the real estate
industry, a mortgage consultant must "split" with their broker
of record. For instance, the split agreement I have with
my current broker is 60/40. This means I get to keep 60%
of my commission and my broker takes 40%, which reduces my
commission in this example to $6,000. My broker makes
$4,000.
Is that the only money the broker
makes?
No. The broker also charges an administration fee, a
processing fee, and "pass-through" fees. They are listed
as "broker fees". Virtually every mortgage transaction
has broker fees, even if it doesn't have discount points or
origination fees. Broker fees will also very often be
represented as "points" and this is to your benefit.
Fees are not tax-deductible, but points are. If you have
to pay something, you may as well get as much benefit out of
the payment as possible and you need to be able to trust your
mortgage consultant to do this kind of looking out for you.
A pass-through fee is a fee the broker is charged for a
service provided on your behalf, which is being passed on to
you, such as fees for credit reports and related items.
So that's why it's called a "pass-through" fee... the company
is being charged for it at the time the service is provided
(at the time the credit report is pulled) and then the cost is
passed through to you since it's your stuff.
If you did not pay the appraiser when he came out and
performed your appraisal, you could see this as a pass-through
fee as well. There is very often a clause, or sometimes
even a form you must sign, which says you are entitled to a
copy of your appraisal if you paid for it.
Technically, according to John Cirincione, the National Chief
Appraiser of Mortgage Information Systems, there is no fixed
expiration date on an appraisal; however, most lenders
consider them outdated after six months. There are uses
for your appraisal outside of your mortgage, such as divorce,
estate settlement and the Internal Revenue Service,
relocation, buyer offers, and property tax abatements.
Life can throw you curve balls; you just never know what your
appraisal may come in handy for.
Let's look at the points you're
charged...
"Points" come from 3 different sources in a transaction and
every loan will have at least 2 of them. Many loans will
have all three. The three sources are:
- Origination Points.
This is my fee as I am the "originator" of your loan.
My fee is two points, however, you may see less
than two points if the lender offers a "rebate" on your
loan. A rebate is where the lender pays x-amount of
points or fractions of points on your particular loan
product. If the lender rebates 1-1/2 points, then
under origination fees you will only see 1/2 a point or .50
because I will get the rest of my commission from the lender
instead of you. Loan products that offer a rebate are
usually at a higher interest rate.
- Discount Points. This
is what it costs to buy a better rate. Not every loan
will require that discount points be paid. Loans come
priced 3 ways:
- With discount points charged to you, the buyer, for a
lower rate.
- At "par" with no discount points and no rebate.
- Above par with rebate.
- Broker Fees.
As I mentioned before, this will be the administration fee,
processing fee, and any pass-through fees.
Note: You will not see the broker's 40% listed under Broker
Fees. It is included in my 2 points (or less) under the
origination fees. The split happens at my office after
the checks are cut at the close of escrow. My broker's
office gets the check for the 2 points and then the split is
applied to the amount and I get a check for my 60%.
Before the law was passed that makes it illegal for you to
be charged more than a total of 5 points in a transaction,
many loan officers made a killing by putting people in higher
rate loans with huge rebates (sometimes 3 points).
Rebates are also referred to as the "back side" of a
transaction or as the YSP or Yield Spread Premium. If someone is making 3 points on the
backside, it means the lender is paying them a rebate for
selling that particular loan product to you.
These unscrupulous loan officers were getting paid maybe 3
points on the back side of a deal and still charging their
clients 5 points on the front side, for a total of sometimes 8
points! That's highway robbery!
I'm not greedy... I want a fair commission for the services
I provide, which is my 2 points. If the lender were to
offer me 3 points on the back side, you wouldn't be charged
any origination on the front side and I'd give you the
extra point over my commission that the lender paid me
or use it to pay your credit fees, appraisal,
and some of the broker fees - whichever you preferred.
By now you're probably wondering if
you'll have to pay these points out-of-pocket...
I work hard to structure my deals so that you bring as
little of your cold, hard cash into the deal as possible.
You can certainly pay your points and fees up front if you
choose to (they'd go into escrow) or, if you have enough
equity, this amount could just be added to your loan amount.
Please be aware that just because I structure your loan so
that all origination points and broker fees are added to the
loan amount doesn't necessarily mean you won't need any money
to close at all. You will probably have to put up the
pro-rated amount of tax money as well as any mortgage
insurance. Many loans won't have mortgage insurance.
If you choose to have your property taxes impounded, you'll
need to put up the pro-rated amount of property taxes too.
However, you won't have any surprises because I'll lay it
all out for you and try to answer all your questions
before we get to closing.
I know it seems like a lot of
money...
And it is... but it's not an exorbitant price to pay to
make sure you have a serious professional looking out for you
in this very important transaction. As your mortgage
consultant:
- I'm your advocate through the entire process, using my
expertise and training to look out for your best interests.
I never lose track of my moral compass in the interest of
closing a deal.
- Some agents sell the same loan product to every client
whether it's any good for them or not. I'll take time
to get to know you because the better I know you, the better
service I can provide you. I learn as much as I can
about your goals, finances, and long term plans so I can fit
you with a mortgage that's just right for you.
- I make extra effort to make sure you know what you're
getting into and what the real costs are - even if it means
talking you into a smaller loan you can more easily afford.
In this way I do my part to bring down foreclosure rates and
protect you from financial crimes.
- I structure my deals to minimize the amount of money you
must bring into the deal or pay out of pocket. And I
stay on top of things so that you have no surprises at the
signing table.
- And speaking of the signing table... if it is physically
possible for me to be there, I will be at your signing to
answer any questions and address any concerns you may have.
- I keep things moving along smoothly by making sure the
conditions of loan approval are met and the necessary
documentation is collected.
- I'm the insulating shield between you and predatory
lenders.
- It's my job to point out where you can save money or
what loan product, out of a sea of loan products, would best
serve your interests and your situation- even if it means I
make a smaller commission.
- I help you plan for your future using your mortgage and
equity as a wealth-building tool to meet personal goals like
saving for your child's education (or your own), raising
capital for a home business, planning ways for you to afford
insurance that will protect your family, buying a new car or
virtually anything else you'd like to see in your future.
From David Hovasse, founder of
Single Parent Properties... "Loan originators are in a good
position to help turn back the growing tide of foreclosures
across the country, to prevent mortgage fraud and to combat
predatory lenders."
One thing you should know going in...
I'm not for everyone. I only make deals that make
sense and I'm very good at saying no. If your deal
doesn't make sense, meaning it's not in your best interest,
then it isn't in my best interest either and I won't do the
deal. If we can restructure it so that it does
make sense, and it's something you can reasonably afford, then
we can go ahead and make something happen. It serves no
one - not you, not me, not the lender, and not the loan
industry - if you wind up upside-down on your house in six
months or a year.
If I can't restructure the deal into anything that makes
sense for you, I will let you know. I will tell you
honestly and frankly (but without any judgment, meanness, or
attitude) the problems that I see and offer you sound
solutions so that you can cure the problems and perhaps be
successful in securing a loan in a few months or even a year
or two.
Hopefully, I will have done so well by you that you wouldn't
dream of calling anyone but me when you're ready. I'd
rather miss out on a commission now, and help you find your
way, then sell you a rotten deal and see you lose your home.
Fair enough? Let's talk and see what I can do for you
and your family! Call me at 408-310-0027.
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