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HLS
ParticipantYour assertions are partially correct.
However, mortgage brokers don’t get “paid” anything UNLESS they charge the borrower a fee for their service
OR
overcharge the borrower in rate and get a commission back from the lender.
It’s a reward for screwing the borrower into a higher rate than they actually qualify for. The lender gets a higher return for the life of the loan and shares the bounty with the mortgage salesperson. Welcome to America.The don’t get a penny if they offer the borrower the PAR rate. It’s all highly regulated beyond what most people know.
Paying a fair fee to get the PAR rate in the best loan that they qualify for is what most people should do, assuming that they plan on keeping the loan for at least 5 years.Assuming that ” a big bank” will give you the best rate is simply ignorant.
Most people have no idea what they actually qualify for.
The service that one should be paying for, is to have someone get them a PAR rate, and have their loan choices and options explained to them in words that they can understand.
Banks have retail prices and wholesale prices. When you deal direct, you are dealing with a “retail” salesperson who has limited products to offer, and are at their mercy in both knowledge & programs.
It MUST be disclosed on your escrow statement if a commission was earned by a mortgage broker.
Banks and direct lenders do NOT have to disclose that you were overcharged, it’s internal and the salesperson may not even know it. There actually is a purpose for an honest person to get you into a loan, the problem is finding one.
Your 95% is probably pretty accurate.Anybody who plans on keeping their loan for 5+ years is usually making a poor decision to get a “no cost” loan.
It will cost much more in the long run.Most people have been screwed on their loans in either rate, fee or term; and it was often by a family member, friend or neighbor.
Shopping for a rate is silly. Shopping for a person to trust isn’t.
By your logic, if you don’t shop at Albertson’s, Vons or Ralphs, does that mean that you shouldn’t be buying groceries ?
ParticipantSorry,,
I hadn’t read the article before answering your question.Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)
I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.
I’ll check the article later.
ParticipantSorry,,
I hadn’t read the article before answering your question.Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)
I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.
I’ll check the article later.
ParticipantSorry,,
I hadn’t read the article before answering your question.Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)
I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.
I’ll check the article later.
ParticipantSorry,,
I hadn’t read the article before answering your question.Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)
I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.
I’ll check the article later.
ParticipantSorry,,
I hadn’t read the article before answering your question.Neg Am loans are also called ARM’s.. Pay Option Arms.(POA’s)
I’m not aware of any I/O loans that were sub 4% originated in 2005 and after….If there was anything like that prior to 2005, it would have likely already adjusted upwards.
I’ll check the article later.
ParticipantWhat do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/PaulsonThere is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.
If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.
Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.
The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.
ParticipantWhat do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/PaulsonThere is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.
If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.
Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.
The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.
ParticipantWhat do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/PaulsonThere is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.
If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.
Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.
The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.
ParticipantWhat do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/PaulsonThere is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.
If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.
Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.
The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.
ParticipantWhat do you mean sub-2% ??
There were no 2% SP loans….
The 1%-2% PAY RATES were 7%++ loans that were neg am, and are not covered by Bush/PaulsonThere is isn’t an exact “typical” subprime loan, that was originated 1n 2005-2006.
If somebody had a 5% start rate fixed for 2 years with an interest only minimum payment, their first rate adjustment after two years (2/28 or 2/38) could be 2 points, making their rate 7%. In itself, that would be a 40% jump in interest payment.
However,
It would probably recast to a 28 year amortization, making the payment $2039 (63% higher)
OR
a 38 year amortization making the payment $1883 (50% higher)This payment would only be in effect for 6 or 12 months max, before it would adjust higher again.
Nobody will have an increase that is 100% or higher, nor anything that would be much lower than 20-25%.
The sad thing is that these loans were never intended to be a long term loan, but a short term band-aid loan.
Unfortunately the scum of the mortgage industry didn’t explain it to borrower’s that way.As of today, there are still more than 80% of subprime borrowers paying their loans. I expect this to change for the worse in many areas as rates adjust higher and folks simply cannot qualify for a refi.
ParticipantIf you only plan on staying for a few more years and then selling, getting a 30 fixed today would be a waste.
From your profile, it sounds like you can qualify for any loan that you choose. You could refi into another 5 YR loan today and buy yourself 60 more months of security.
Your payment will be higher than what you have today. The interest might be deductible. It’s like paying for insurance. Is it worth it to you or do you want to gamble ?
Choosing a “no cost” loan today will not add anything to your balance and lock in a longer fixed period than one year. You still have a relatively cheap payment.
If rates do go lower, you can refi again.If the condo complex is a high % of tenants and going that direction, refi sooner rather than later.
Also, once you drop below 20% equity, the refi rate will be higher. Sounds like you are close to that point now.ParticipantIf you only plan on staying for a few more years and then selling, getting a 30 fixed today would be a waste.
From your profile, it sounds like you can qualify for any loan that you choose. You could refi into another 5 YR loan today and buy yourself 60 more months of security.
Your payment will be higher than what you have today. The interest might be deductible. It’s like paying for insurance. Is it worth it to you or do you want to gamble ?
Choosing a “no cost” loan today will not add anything to your balance and lock in a longer fixed period than one year. You still have a relatively cheap payment.
If rates do go lower, you can refi again.If the condo complex is a high % of tenants and going that direction, refi sooner rather than later.
Also, once you drop below 20% equity, the refi rate will be higher. Sounds like you are close to that point now.ParticipantIf you only plan on staying for a few more years and then selling, getting a 30 fixed today would be a waste.
From your profile, it sounds like you can qualify for any loan that you choose. You could refi into another 5 YR loan today and buy yourself 60 more months of security.
Your payment will be higher than what you have today. The interest might be deductible. It’s like paying for insurance. Is it worth it to you or do you want to gamble ?
Choosing a “no cost” loan today will not add anything to your balance and lock in a longer fixed period than one year. You still have a relatively cheap payment.
If rates do go lower, you can refi again.If the condo complex is a high % of tenants and going that direction, refi sooner rather than later.
Also, once you drop below 20% equity, the refi rate will be higher. Sounds like you are close to that point now. -
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