Loan Stuff

Hi People.
I am so proud to introduce to you my very first guest writer, Eddie Messina. Eddie's a good friend of mine and we have done some transactions together. You might want to listen to him, he'll save you some loot & heart ache. I'm going to take a nap.
Here's Eddie.....

Bank of America was in the news again (back on the 10th) this time being charged with fraud. This really got me thinking this morning about these crazy banks. I’m not sure they are always looking out for your best “interest” … thank you I will be here all night- yuk yuk yuk. The pun, the lowest form of comedic humor but my best friend. Let’s talk about interest for a moment. Many homeowners choose their bank when taking out a mortgage loan. Why not? It is convenient and grandma Moses did it that way. Does this convenience come at a price? Of course! You could wash your car for free but most of the time we take our vehicles to the car wash to have somebody else do it and we are perfectly cool with paying the extra money to rid ourselves of this responsibility The difference between these two conveniences is one has an obvious price to pay (car wash) and the other has a hidden convenience charge (banks) that could cost you’re a few thousand over the years.




The truth is most lenders have access to about the same rates as anybody else on the block and when they price out a loan for a client most of the time they have to reveal what profit they are making on the loan (points/rebates) on the closing statement ( HUD-1) but Banks are exempt from the Real Estate Settlement Procedure act (RESPA). RESPA laws protect borrowers by requiring lenders to disclose information about their mortgage profit margins. Because of this exemption, the banks have a great way of slipping in a hidden fee called the Service Release Premium. This is where they boost your rate and sell to the secondary market for profit. If you were like me before I entered the world of mortgages, I had no idea what the daily wholesale rate was on a given day. If a lender or bank told me 6% I was like cool what is the payment?? Right everyone is worried about the payment but it is important to know with a little probing I could have got a %5.5 saving thousands of dollars over the life of the loan. I could put some carrots in my baby girl’s ears with that kind of savings!



To avoid this always make sure you know what the yield is on the Fannie Mae website versus the Banks rate sheet. Have your bank rep try to explain the difference between the Fannie Mae rate and their rate… that will be good for a laugh or two. Now you are not going to get the Fannie Mae rate (unless you’re bed with Fannie Mae but I don’t want to get into your personal life right now) because everyone has to make a profit in business. Even the street hustlers know that and believe me these hustlers with the ties they really know this game. People should be paid for their services and banks and mortgage brokers are no different. At least you can negotiate a lesser rate than you would have received being the wounded deer or perhaps take the higher rate, but have your closing cost paid! Now that is a novel idea. . . save some of that hard earned money for your savings account versus buying a rate! Well, I will get into that topic next time. I’m not sure you are ready for that yet! I can only unplug you from the Matrix one blog at a time; however, I will leave you with one last tip because I know your are so hungry for this information. When dealing with a bank you are basically stuck using their rate sheet and agenda but if you use a broker they can search multiple lending institutions for programs/rates. Again, I will tell you how to navigate with a broker on my next post! I can only feed you so much this time. Catch a (wo)man a fish and feed him/her for dinner. . teach him/her how to fish, feed him/her for a lifetime… or at least until they get a well paying job.

For more info visit http://emessina.spectra-funding.com



Edward Messina

Spectra Funding

cell: 619-933-3462

Fax: 619-303-7485

emessina@spectra-funding.com