5 Mortgage Secrets Your Broker Won’t Tell You

5 Mortgage Secrets Your Broker Won’t Tell You

Millions of American homeowners and investors each year go to mortgage lenders for help in financing or refinancing their homes. But what they do not know is that they are paying more than they have to.

Taking out a mortgage loan requires full comprehension of each feature that a mortgage plan offers. Before signing on the dotted line, you should make the necessary calculations and accurately compute the cost of each type of mortgage with respect to the life of the loan, plus the length of time it would take to pay off the mortgage, including the amount of monthly payments.

Here are 5 mortgage secrets that your mortgage lenders won’t tell you outright:

1. You don’t have to pay for private mortgage insurance (PMI).

Consumers who make downpayments below 20 percent of the purchase price are usually required to pay PMI, together with principal and interest payments. What most borrowers are not aware of is that they can avoid paying mortgage insurance by taking out two mortgages.

2. By closing at the start of a month, you increase your closing costs.

Mortgage interest payments are usually set in arrears to coincide with complete calendar months. This means that any time you have between your closing date and your first complete monthly due on a purchase mortgage is considered additional time. This further means that you are required to pay interest on those extra days up front at the closing table. By closing later, you may not be able to save money but you don’t have to pay higher closing costs up front.

3. You can negotiate broker fees.

Mortgage brokers buy mortgages at wholesale prices and then rack them up to retail prices. By law, these brokers should reveal their commissions in a Good Faith Estimate before consumers sign the documents. Consumers have a chance to negotiate their fees if they want to. A standard-sized mortgage loan can have a markup range of up to 1.5 percent. Those with jumbo loans can likely negotiate it down.

4. Low interest rates advertised are usually discount rates.

Mortgage lenders typically advertise mortgage loans with low interest rates. But what they don’t tell you is that these rates are only introductory, which are used to entice customers into applying for a mortgage loan from them. These rates are only applicable for a certain period. When the introductory period is through, the mortgage lender then adjusts the discount rates to the actual rates, which are higher than the introductory ones. Because of this, the monthly mortgage dues suddenly increase. Moreover, these mortgage loans may also have variable interest rates, meaning they are bound to increase some more.

5. “100% financing” and “5% Fixed Interest Rates” are not exactly what they seem to be.

A lot of mortgage lenders have the habit of using such baits as those above. But these are usually empty promises. Consumers can well stay away from these enticements. By reading the fine print on mortgage documents, borrowers will uncover outrageous lender charges, hidden fees and rates that don’t remain fixed at all. These should be enough to make people think about falling into the mortgage trap that’s set exquisitely for unassuming consumers.

Borrowers may also be interested to know that aside from the obvious charges, they are also required to pay for mortgage insurance, loan application fee, valuation fee, legal costs, stamp duty, disbursements, survey report, builder’s report, pest inspection report, strata inspection report, registration fees, switching fees and refinancing fees.

To be sure that you get the best loan you can, keep these little known points in mind and be sure to ask lots of questions If the lender skirts the answer, it probably a good idea to move onto someone else. By being informed, you will be more apt to choose the best deal for your situation.