The Source of Real “No-Fee” Loans? It’s Your Mortgage Broker.

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Shopping around for a new home loan? First of all – congratulations! We’re happy to know our advice to consider a home purchase is catching on.

Second, we’re aware that this could possibly be the very moment when you’re the most confused about all the advertising you’re noticing now from mortgage lenders. It seems everywhere you look, the words “no-cost mortgage” or “no-fee mortgage” catch your attention, and that has a really appealing ring to it. So initially, you might ask yourself, “That’s what all lenders are saying – so they must all offer the same loans, right?”

“But that’s wrong,” reveals Rick Piette, owner of locally-owned Premier Mortgage Lending in Las Vegas.

“Like most things that can sound too good to be true, this would be one of them,” Piette continues. “The truth is that many mortgage lenders make it a point to confuse this very issue – precisely to make people assume it doesn’t matter what type of lender they choose. But the reality is there’s a very big difference, and it all has to do with the regulations that govern each type of lending institution: There’s one set of rules that applies to Banks and Mortgage Bankers . . . and another set that applies to Mortgage Brokers. And the key difference is this: Full disclosure to the customer.”

Here’s how it works:

Banks and Mortgage Bankers may say they offer “no-cost mortgage” loans. And that’s just what you’re looking for, right? A way to save that extra 3%-5% of costs (which can be several thousand dollars) for Loan Origination, Processing, Underwriting, and Document Preparation Fees.

“However,” reveals Piette, “while they may be charging you nothing for those fees on your Loan Estimate, they aren’t required to disclose to you that they very probably are trading out those fees to charge you a higher interest rate, instead. What’s worse, by paying a higher interest rate over the life of your loan, it can end up costing you a lot more money than those fees would have been to begin with.

“In other words, Banks and Mortgage Bankers are allowed to present you with the illusion of paying no fees, but make no mistake – they’re not reducing the profit they’re making on your mortgage loan. They’re simply shuffling the numbers so it sounds good to you – but in the long run it can actually end up costing a borrower more money, rather than less.”

Mortgage Brokers, though, have to operate under a different set of rules:

• First, the amount of money they can make on a mortgage loan is capped by law.

• Second, they can only earn income on a mortgage loan from one source.

• Third, they are required to disclose the source and total amount they earn on the loan to the borrower.

“These might seem like three simple statements,” adds Rick Piette, “but together they make a huge difference when it comes to what the customer will actually end up paying for the mortgage loan they choose.

“How? Because when a Mortgage Broker’s Loan Estimate shows $0 in loan fees – there really are NO FEES. Borrowers actually save that money – because the Broker isn’t making up for that “great deal” by charging you more somewhere else in your loan documents. They can’t. It’s the law. Which is finally (in our opinion) – working on the side of the consumer.

“That’s why we encourage every person who is looking for a home loan to always go to at least two different lenders – and compare those Loan Estimates. (And one of them should be a Mortgage Broker.) All you need to do is compare the cost of the fees and the interest rate – and your choice is usually very simple to make,” Piette confirms. “It’s the one that costs you a lot less money!”

For more information about how to shop wisely for your next mortgage loan – and potentially to save literally thousands of dollars – visit Premier’s “Know Before You Owe Nevada” website to view the quick and informative educational videos that will put you in charge of the cost of your next mortgage loan.

Premier Mortgage Lending, NMLS #393282, is located at 701 N. Green Valley Pkwy., Suite 125, Henderson, 89074. The full-service lender is a member of the Las Vegas, Henderson, and Boulder City Chamber of Commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.

YES – THE NEW CFPB REGULATIONS LAWS REALLY ARE HELPING CONSUMERS

Logo0_@2Going back to that “which side of the political aisle you’re on” issue that we’ve talk about before, if you’re not actually working IN the financial services industry, there’s a good chance that you just skim the headlines that talk about the effects on consumers since the CFPB (Consumer Financial Protection Bureau) was created.

So just in case that might describe your experience with how the new laws are affecting the public, we thought it might be a good time to point out some of the real benefits that have come out of the Dodd-Frank Act. Things that are helping real mortgage borrowers – people who are just like you.

Information Resources

Prior to the creation of the CFPB, the road to getting a mortgage loan was a difficult one to navigate. Basically, each mortgage company pretty much made their own rules (within certain legal guidelines) – but there wasn’t much of a way that borrowers could easily compare “apples-to-apples” per se as far as they information they were given.

Now, the CFPB not only offers excellent resources on their website that explain where to start when it’s time to search for a loan, but easy-to-understand explanations on the differences between types of loans, and even between types of lenders. For first-time buyers and others who aren’t that familiar with the mortgage loan process, the CFPB’s “Know Before You Owe” website has helped take the mystery out of the mix, and also helped people learn how to avoid shady lending practices and overcharging. Score one for the consumer!

Consistency in Disclosures, Policies and Procedures

If the only plus out of the CFPB’s creation were the two forms now used – the Loan Estimate and the Closing Disclosure – it would be a solid win for consumers all by itself. These two forms are now far easier to understand, easier to use, and required to be used by every lender so comparisons are easily made.

But there are also other benefits that came about – including the rule that borrowers get three business days to review their Closing Disclosure and ask questions before they close on their mortgage loan. (In other words, the days of “closing surprises” are gone – when the pressure was on to close or lose a deal and emotions were running high.)

“Know Before You Owe” Program Provides Borrowers with the “Big Picture” of Buying a Home

Mortgage loan officers who are more concerned with getting customers to closing and picking up their paycheck – rather than ensuring their borrowers are actually getting the right loan for their needs – have a new foe: The CFPB’s “Know Before You Owe” site, mentioned above.

But, of course, consumers need to know this information exists to allow it to help them in making the big decision of buying a home. (That’s one reason Premier Mortgage also created their KnowBeforeYouOweNevada.com website – because we agree that customers should be fully informed about the decisions they’re making.)

At the CFPB’s site, several resources are provided to help people consider all the costs and expenses involved with making a decision to buy a home. With budgets and worksheets, checklists and conversation starters, it is designed to provide borrowers an “eyes wide open” approach to home buying.

Those three things are just the tip of the iceberg about how everyday consumers are gaining benefits from the rules and requirements put in place on the financial industry following The Great Recession. If you pay closer attention to what comes underneath those ‘complaining headlines’ about the CFPB in the future, you may notice one striking similarity: Most of the grumbling is coming from the financial institutions affected by these changes . . . not from the consuming public. A little something to worth remembering!

Premier Mortgage Lending, NMLS #393282, is located at 701 N. Green Valley Pkwy., Suite 125, Henderson, 89074. The full-service lender is a member of the Las Vegas, Henderson, and Boulder City Chamber of Commerce, Better Business Bureau and Southern Nevada Home Builders Association, as well as an affiliate member of the Greater Las Vegas Association of Realtors.