Home Buyers Need To Exercise Greater Caution When Shopping For Supposed "Market Rate" Mortgages For Which They Could Be Substantially "Overcharged"
Military veterans, newly transplanted Hispanic-speaking immigrants, and first-time home buyers need to be increasingly wary of major financial institutions that are aggressively promoting so-called "discount mortgage" rates designed to entice often inexperienced buyers into making home purchases.
In what sounds like a redo of what got America into trouble back in 2008, that's the message being conveyed by Gary Cooper, longtime mortgage broker and a noted consumer advocate who owns and operates a respected independent mortgage and realty business in North San Diego County.
"When inexperienced or unsophisticated home borrowers approach many major banks, credit unions, and so-called 'direct lenders' to locate the very best interest rates available for a new mortgage, I think most would be surprised to learn they are frequently being gouged," Cooper laments.
"Unfortunately, many leading banks and affiliated brokers don't tell consumers that their institutions are manufacturing their own internal rate sheets. By doing so, participating institutions aren't required by law to disclose what is known in our industry as the actual 'yield spread premium' market rate. And that lack of full disclosure can dramatically increase the total long term cost of borrowing."
Cooper explains that many lenders will provide novice, veterans, and first-time buyers with a "good faith estimate" closing cost work sheet. The work sheet can often lead the inexperienced to believe that if they're willing to pay for additional discount points to "buy down" a lower interest rate, that they can get that lower rate.
"In fact," Cooper notes, "because many such rate sheets are internal to and manufactured by the lenders, the rate sheets can provide for additional mark-ups and hidden compensation to the lender. The practice can also wind up costing uninformed buyers as much as $10-40,000 or more over the life of a single family home loan purchase due to additional interest payments incurred above and beyond the standard market rate. These so called 'no cost' loans' are increasingly coming to become what amount to industry insider shell games. The terms 'no points,' 'no costs' and 'no closing costs,' are each essentially individual 'shells' that can be moved around and manipulated to create a false perception that a buyer is getting a more attractive rate than what the true market rate is."
Mountain Trust REALTOR Sarah Smith agrees, noting: "Prospective home buyers who've called us just prior to making a final purchase decision have often been shocked to learn just how much a truly independent mortgage company like ours can save them. We eliminate the smoke and mirrors because we see our mission as being primarily one designed to educate consumers. All of our staff are licensed by the Department of Real Estate and the National Mortgage Licensing System, so we're held to the highest standards of ethics and professionalism regulated by law. We explain & provide all of the options for buyers. And we can often find ways to make favorable rates even more favorable using professional creativity that's both ethical and completely transparent."
Cooper adds with pride: "Our ethics are what set us apart from 99.9% of companies in our industry."
About the Company
Mortgage Trust Mortgage is a full service lender and a real estate company uniquely positioned to provide clients with "one-stop shopping" services conveniently located under one roof. Mountain Trust Mortgage has consistently been awarded an A+ rating by the Better Business Bureau since first registering with the agency nearly ten years ago. Our highly seasoned, vetted team of brokers and agents are specifically trained to actively listen to clients' needs, identify relevant issues, and advise them with regard to a wide range of solutions that are in their best interests. We take pride in placing our clients' best interests ahead of our own. Whether discussing potential loan modifications, refinancing as a last resort, or even short sales, our highly knowledgeable, talented team enjoy helping home buyers and sellers respond to what can often seem like daunting challenges with comprehensive information, sensitivity, professionalism, and pride.
For more information, or to request a free initial consultation, call 858-376-1299 or go to www.mountaintrustmortgage.com