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How to Save on those Home Loan Fees Your Broker Charges You
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by Vanessa Ryan
Vanessa Ryan is a real estate broker, stock trader, and corporate recruiter.
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The media and the politicians have portrayed loan brokers as sharks who are out to fleece an unsuspecting public. Having been in the lending industry, I have seen it go both ways. Sometimes brokers charge more than they should. And sometimes consumers overstate their income, or forget to mention the delinquencies that show up on credit reports pulled just before the loan funds. When that happens they are surprised when their rate is higher than they were quoted. So are the loan brokers. Just remember, once a loan is approved the lender will run a credit check before it funds to make sure the borrower doesn't have any derogatory transactions that didn't show up in the initial credit application.
Let me clarify one point before I go any further. Loan brokers are not lenders. They do not set the policies or the criteria used to approve loans. They contact lenders, such as Bank of America, Wells Fargo, and Washington Mutual, who determine those guidelines based upon what entity will buy the loans they fund. Lenders, such as Downey Savings, who do not sell off their loans, will often have different guidelines than lenders who do. Everyone is in it to make money off the consumer, in just the same way as a merchant who buys inventory wholesale and sells it at retail to the public.
People often think if they go directly to a lender instead of going through a loan broker they will save money. In rare instances they will. For example, last year Bank of America ran a special––a no cost equity loan with a low rate. Banks hungry for business will cut their fees to increase their market share. But generally, you will save more by going through loan brokers because they will shop around for the bank with the lowest fees and rates. With loan brokers it's not a one-shot deal. They want your repeat business and your referrals, so they are going to give you the best rates and terms possible. Remember, everyone who works on your loan, from the loan officer, the loan processor, the underwriter, the escrow officer, the administrator who compiles the documents you've submitted, to the notary who notarizes your signatures needs to be paid. What they are paid, and what are often referred to as "junk fees" are for actual services performed. You could not get a loan without these services. But of course, just as one store may sell the same television for $200 less than another store, a wise consumer shops around.
The best way to shop around is to ask your friends and co-workers for recommendations. Were they treated fairly and did their loan close on time? Were the fees and rates they paid the same as what they were quoted when they applied? When contacting loan brokers or lenders it is perfectly acceptable to ask them to list their fees even before you have them review your credit and income documentation. If you don't like what you hear, keeping looking. By shopping around you can save as much as $1,500 off your closing costs.
Published: Jul 14,2008 17:38
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Andy Cowan
Andy Cowan, an award-winning writer, whose credits include Cheers and Seinfeld, regularly contributes humor pieces to the Los Angeles Times and the CBS Jack FM Radio Network.
Paul M. J. Suchecki
Paul M. J. Suchecki has more than 30 years of experience as an award winning writer, producer, and cameraman. He's written numerous newspaper and magazine articles. Currently he writes, produces and shoots for LA CityView Channel 35 and his more than 250 articles for Ehow.com are approaching half a million readers.
Coby Kindles
Coby Kindles is a freelance journalist, screenplay writer and essayist. She has been a staff writer at Knight Ridder and a regular contributor to The Associated Press.
Debbie Milam
Debbie Milam is a syndicated columnist for United Press International, an occupational therapist, family success consultant, and motivational speaker with more than 20 years experience. Her work on stress management, spirituality, parenting, and special-needs children has been featured in over 300 media outlets including First for Women, The Miami Herald, Elle, Ladies Home Journal, The Hallmark Channel, PBS and WebMD.
Dan Rafter
Dan Rafter has covered the residential real estate industry for more than 15 years. He has contributed real estate stories to the Washington Post, Chicago Tribune, Business 2.0 Magazine, Home Magazine, Smart HomeOwner Magazine and many others.
Jack Nargundkar
Jack Nargundkar has been repeatedly published in Business Week, The Wall Street Journal, The Washington Post, and The New York Times. He is also an author of "The Bush Diaries" published in July 2005.
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