Am I being ripped off by this Mortgage Broker??
ok, this is my first home purchase and I have tried my best to educate myself on all aspects, but the more input I can get the better. Some background, the mortgage company is a pretty dominant player in Manhattan and by all accounts should be reputable, but I have a gut feeling somethings are…
ok, this is my first home purchase and I have tried my best to educate myself on all aspects, but the more input I can get the better.
Some background, the mortgage company is a pretty dominant player in Manhattan and by all accounts should be reputable, but I have a gut feeling somethings are not adding up on what the mortgage broker is telling me.
1. the GFE (good faith estimate) that was drawn up by the broker has the rate he quoted me, however the GFE sent to me by the bank has a rate .65% higher.
—his response: “oh, thats just a rate the bank puts there until we lock your rate, don’t worry, that rate won’t be the rate you get, they just need a number so they threw that in”
(my alarm bells always go off when somebody say, “don’t worry.”
2. We spoke about his commission, it was to be 1 point of the loan amount, I asked if there was YSP (yield spread premium) he told no, i’m getting the rate the bank is offering with no mark-up, however on the Banks GFE it says the YSP will be anywhere from .125-6.5%!
3. He told me not to worry he will not charge me for the application fee (300.00 but i have already paid so much money on other apps its getting crazy), Well anyway they charged my credit card, his response: “don’t worry, we’ll credit you/ write it off later.”
on top of this the banks GFE has a “bonus processing fee to broker of 300.00 , 300.00 app fee to the broker and 150.00 processing fee.”
1. Can I/Should I try to get the bank to send me a new GFE with the “real-actual rate they are giving me?
2. all these junk fees can they still be negotiated?
3. i think i should run away from all this but, i need to know if this is just one of the things you gotta put up with?
thanks
One word sums up brokers>> scammers!! Just dont use them! Go to a credit union, shop online, or go directly to the bank.Why have a middle man jacking up your interest rate and charging junk fees? I know a banker makes commission but at least you are dealing with the source. Brokers will be no more in about 3-5 years, make my word. As people learn how theese scammers work, more and more people will stay away!
In response to anon who used Norman Calvo at Universal Mortgage, I can tell you that I used him about a year ago and he did pretty much EXACTLY what the original poster is describing.
OP, is that who you are using? Universal Mortgage? My advice would be to stay away.
In my opinion, you are always getting ripped off when dealing with a mortgage broker.
In this day and age, they’re just irrelevant.
Same goes for rental brokers in the internet age… I cannot believe people still pay 15% of a year’s rent for someone to post a craigslist ad and do a $20 credit check.
I always found mortgages on my own — my personal and a commercial one for the coop building I used live in. However, in buying my brownstone, I used a mortgage broker and had an excellent experience, both for the original mortgage, a Home Equity and a re-fi. I got a lot of service and had an excellent experience – I used Norman Calvo from Universal Mortgage. He never was too busy to explain every detail of every transaction. I was nervous as a cat about the big mortgage buying the brownstone and he was very thorough and helpful. If you don’t feel good about this broker, I’d get someone else.
If you are feeling queasy, there’s a reason.
I’ve used mortgage brokers on several loans in the past, with the exception of two where I went directly to the bank.
Sometimes, mortgage brokers can give the borrower a better rate because:
1) they do get broker rates (possible lower rates than directly from bank) from lenders because of broker relationship; and
2) mortgage brokers can cut their rebate ( commission paid by the bank to the mortgage broker and not paid by borrower) and give their clients a more competitive rate.
A good faith estimate does not always reflect your actual rate, costs, etc., but if you locked in your rate (with or with no points to pay down the rate) you WILL get a rate lock confirmation so you do not have to worry about your rate being different at the closing table.
There is usually also a mortgage broker fee agreement you sign so please read the fine print. There are many honest brokers, but also some out there to screw people.
Mortgage brokers very rarely add value but they get paid and it comes out of your hide one way or another. I have used them but I have come to the conclusion that there really is no reason not to just go directly to the lender. It just cuts one more fee out of the deal.
Btw, who’s the company? I have been burned by a prominent Manhattan Company too when I bought my house, so maybe they’re the same and I can tell you what they did to me.
Walk away from the guy. But before you do, get a copy of your loan application, appraisal, and your credit report(plus know your three FICO), and go shopping. Don’t talk to any loan salesperson over the phone, do it by email. In other words this will be getting it documented.
Get a loan confirmation in writing and then good faith estimate(and a second one within one or two weeks before closing to confirm rate/term)and be aware of the condition(look at it). You can use our STEP program for free. Hope that helps.
Shop around. I’m at the same point in the process and found that my broker didn’t honor the rate on the GFE– the commitment letter came in much higher.
I’ve started shopping around more, calling lots of the banks directly, trying to get another commitment letter to make sure I have some leverage. I’ve actually found a better deal with a bank (assuming same bait and switch doesn’t take place).