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Understanding Mortgages - Mortgage Education
Just like your mortgage options, there are several different philosophies about different features and ways to advise their customers on mortgages. You have probably heard it on the radio, 'why pay closing costs when you don't have to?', this is there "Unique Selling Proposition"(USP) thats not really unique. Every loan has lenders fees, title fees and impound costs for you insurance and taxes. This is all part of a mortgage, granted, there are loan officers and companies out there that have extremely high fees that you need to watch out for. With a standard mortgage and closing costs you may be able to get a 6% 30 year FIXED interest rate. With reduced closing costs your rate may go up to 6.375% or for a no closing cost loan it may go to 6.625%. They say they have refinance clients 4 or 5 times and never added money to their mortgage. This USP allows them to make more money than the typical professional mortgage consultant that charges the standard closing costs and gets the client a lower rate and allowing them to pay down their mortgage by keeping them on there amortization schedule. With that USP, in the long run the client pays more interest, pays more to the broker constantly refinancing, and also affects their credit by not having a longer mortgage history and constant inquiries. Every client has their own financial scenario and life plan. For some, a no or low closing cost loan might make sense, and we will look at that option for you. For others, a low fixed rate up front is a better choice.
Another difference of opinion brokers have is whether a single loan with private mortgage insurance(PMI) is better, or would it benefit the borrower to take a 1st and a 2nd mortgage. There are several factors to consider when making this decision and I will present the benefits and drawbacks to each.
Again, each client has their own needs, goals, and risk tolerance. During my application appointment I will review your online loan application, ask question regarding your life and investment goals, then suggest a mortgage that fits your needs. I will always make sure you understand all of the details about your mortgage so that you will not have any surprises at closing or years down the road. In this section, my intention is to give you the information that will help you understand the benefits and drawbacks to the variety of programs and options out there. If you ever have any questions please contact me through the website or by phone.
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