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| Reduce Mortgage Costs by Skipping on a Broker |
Submitted by:
Tip Hero 03/23/2009 7:03 PM
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Middlemen need to make money. They don't just work for you out of the kindness of their hearts. So when you're searching for a mortgage and you go through a broker, keep in mind that you're probably paying for their help.
Consumer Reports, in their Everyday Guide to Saving Money booklet, notes the following:
Let's say that a lender offers a broker a 30-year, fixed-rate mortgage at a 5.625% annual interest rate and 1.5 points. For selling the loan as is, the broker gets 0.5 point. The broker can pass along the deal to the borrower and collect the 0.5%, or up the loan's interest rate to 6% and get paid 0.75% in return for getting the bank a higher income stream. Generally, the consumer has no clue that the loan is costlier than it should be.
Two websites that Consumer Reports suggests using to compare lender mortgage rates directly, skipping the broker, are bankrate.com and hsh.com.
And it's important to also inquire directly with banks, both ones in your community and national banks, to see what kind of rates they are offering.
And this final piece of advice from Consumer Reports:
If you find that a mortgage broker is offering the best deal, check the Web site of the Better Business Bureau for complaints at www.bbb.org. Most states license mortgage brokers; you can check for complaints.
Photo credit: caswell_tom |
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