Loan Products - Type of Loan, Mortgages, Interest Only Loans, and more

This whole concept of 4 or 6 lenders competing for your business has become a complete farce. Think about the common sense facts. All lenders, brokers and bankers go to the same source for there funds. It is usually the corporate cost of borrowing money that establishes what the rate of interest they can borrow money to, in turn, loan you the money and yield a profit. Currently, that cost is right around 4%. If you want to initiate a conventional type of mortgage, which would range from a loan amount of say $130,000 - $800,000, with average to above average credit history, I would go to an investor that has access to this 4% money and, depending upon my status with that investor (Usually in terms of volume of business I write with them.) I can probably obtain a contract for that money (A lock) at around 6% for loans up to $417,000 and 6.625% for loans to $800,000. Their offer to me is not negotiable but, they offer me profit incentives for anything I can pass on to the consumer in terms of rate I charge. Keep in mind, that 6 % the lender is offering me is probably about .25% better than you could obtain walking in the door of your local bank. So that leaves me about .25% of a margin to make an offer to you and make a profit. Remember, these are hypothetical numbers but they are pretty much in the ball park. And, we do have investors that go out of the box for High Net Worth Borrowers that are usually looking for much larger loans.

Our point is, when you hear of a broker offering you 5.5% for a 30 year fixed when we know they can't borrow it themselves for that…we, Websource, become a little suspicious. Now, we know everyone wants the best "deal" out there and, believe it or not, so do we. Our largest segment of business is our repeat client base. And our pipeline is always flowing because we have insist on customer satisfaction. We never get involved with up front fees or hold you hostage because you paid for an appraisal and have decided to go elsewhere. Again common sense will tell you that our biggest expense might be advertising. Our solid core of loyal clientele keeps our volume where it needs to be to qualify for optimum borrowing power and it is our goal to continually build that client base to be able to offer you the best options available.

The word options brings to mind another segment of lending that is very important. Not everyone needs or, in fact, should be placed in a 30 Year fixed mortgage. We know that the media has relentlessly attacked ARMs and Interest-Only Loans. We very strongly disagree with this shot gun approach to "bad mouthing" mortgage products that are absolutely the best possible loan for your criteria! Fact: The average person stays in their initial mortgage less than 5 Years. Fact: The amount of principal you pay during the first 5 years of your mortgage is darn close to interest only. Fact: The average American stays in their home less than 7 Years. Fiction: You need a 30 Year Fixed. Why so you can refinance after 5 years of paying a higher rate than needed to take a little cash out of your home? Our opinion: The 2 biggest factors for the so called "Bubble" in the Real Estate and Mortgage industries are, depreciating values of your home and people not maintaining or improving their own credit rating. PERIOD.

Lastly, the biggest disservice to the borrower by these "4 lenders will compete" outfits is the fact that when the broker quotes you a rate after building in the cost to borrow along with their processing and underwriting fees and trying to be as competitive as possible and still make a fair profit. They are obligated to that Lead Provider to pay them fees of over $1,000 for every loan that closes or goes to escrow through their lead. HELLO! That $1,000 has to come from somewhere and for all of you that has used these services and thought you had the best deal out there. Look at you settlement statement very carefully. It will show the fee paid. We just think it's a sucker bet.