How To Tell If Your Mortgage Broker Is Blantantly Lying To You

More lies are perpetuated in the mortgage business via the Good Faith Estimate than any other document.

Furthermore, only one in 1400 home owners even knows how to read the Good Faith Estimate OR use it as a tool to choose the right home mortgage or refinance loan.

I’m here to tell you that understanding the Good Faith Estimate along with asking your mortgage broker the right questions along the way - can and will put you in control of getting the most accurate mortgage loan quote.

I’m not much for fluff, filler or boring definitions like others who claim to be helping you with your mortgage. Let’s get straight to the point and focus on a few things you may not have heard before.

To follow along with my points about the Good Faith Estimate you can download a free sample copy of the GFE at;

Sample Good Faith Estimate - in PDF Format.

You’ll find that the good faith estimate has countless lines of information, however we’re going to focus the bulk of the attention on only 3 lines. Line 801, 802 and 824.

When you understand these lines/charges thoroughly you are 99% more informed than the average home owner – and much more in control of the mortgage lending process. When you are able to compare these three line numbers and realize how they interact with each other you’ll be able to take the confusion out of a new home mortgage or refinance.

First, let’s look at what each line is and then we’ll make some powerful comparisons.

* Line 801 titled “Loan Origination Fee” is the section that details point(s) paid OR pre paid interest on the new loan. This fee typically goes to the broker as a commission.

* Line 802 titled “Loan Discount Fee” is the section that details the fee if you chose to pay interest charges up front to buy the interest rate lower than quoted. This fee typically goes to the lender as a fee to get a lower interest rate.

* Line 824 (the most misunderstood/hidden charge) titled “YSP” which stands for Yield Spread Premium. This is actually a rebate from the lender TO the broker, typically taken as commission to the broker.

Now let me show you where knowledge is power in making line item comparisons and how you can tell if you’re being lied to based on mortgage quotes from different lenders/brokers.

You can see that line 801 & 824 is a broker commission and line 802 is a lender fee.

Knowing that you can make the following comparisons;

(1) If you see a fee (points you agreed to pay) on line 801 and also a rebate to the broker on line 824 then the broker is getting paid twice as the sample GFE shows.

Do you really want to “double” pay the broker commission?

(2) If you asked for a zero points loan quote, the broker still must get paid so you would typically see a commission on line 824 which is the rebate from the broker.

If there are zero points shown on line 801 and zero commission on line 824 how is the broker getting paid ??? , you might want to ask that question.

(3) If you decide to pay discount points to but a lower interest rate then there can be no rebate from the lender on line 824.

A fee on both line 802 and 824 at the same time is a blatant lie. The lender will not be providing a rebate to the broker while at the same time taking a discount fee for a lower rate.

When requesting home mortgage loan quotes you should be asking to see line 824 which is usually left off of the Good Faith Estimate. Some states require it however most brokers will leave it off so as not to disclose their commission. If you wait until closing to see the line 824 information you may be surprised. Knowing up front gives you more control and understanding when making refinance loan quote comparisons.

Do these rules absolutely always apply to every loan? NO!

Is this all you ever need to know about the Good Faith Estimate? NO!

Is there more you should know when planning your mortgage loan financing? YES!

If you fail to plan, you plan to fail – that’s a huge mistake to make with your home mortgage loan. You can learn more about the Mortgage Loan Process and get the best straight forward advice on putting your own plan together.

On a plight to eradicate the Stupid Home Owner in all of us - and it all starts with understanding the home loan process. Terry Lamb covers the tips, tricks and secrets to taking control of the home mortgage and refinance loan process. Visit Stupid Home Owner today.