Amerisave vs. local broker (loan, interest rate, premium, credit)

[LinusK]

Is it worth it to pay a small premium to get a local mortgage broker, rather than a large internet company (Amerisave)?

Basically the deals they're offering are exactly the same, except for a small difference in the lender's fee - $235, to be exact.

I'm already a little leery of the local guy, because he's already told me two things that I don't think are exactly true - that negative points are illegal in Texas, and that he can save me money.

Still, I'm willing to pay a premium, if there's a benefit to me.

Thanks.

[renriq02]

How are you comparing the 235? for Total closing costs? or just adding up the 800 lines?

I'm surpised that Amerisave is doing pretty good...next to a broker.

A broker should be able to win your business with a better rate or much better cost.

Negative points is when the lender charges you discount points but at the same time raises your interest rate. That is illegal, but not many lenders get caught doing it. It's not the same if they charge you an origination fee......that's different than a 'discount point'.

Originally Posted by LinusK

Is it worth it to pay a small premium to get a local mortgage broker, rather than a large internet company (Amerisave)?

Basically the deals they're offering are exactly the same, except for a small difference in the lender's fee - $235, to be exact.

I'm already a little leery of the local guy, because he's already told me two things that I don't think are exactly true - that negative points are illegal in Texas, and that he can save me money.

Still, I'm willing to pay a premium, if there's a benefit to me.

Thanks.

[LinusK]

By 'negative points' I mean the lender pays me up-front, in exchange for a higher interest rate.

According to the 'mortgage professor' it's perfectly legal, and I can't think of any reason why it wouldn't be. Can Mortgage Points Be Negative?

The $235 is the difference between the lender fees. I'm not considering any of the other closing costs.

They are (or should be) irrelevant, since they are (supposedly) paid to third parties, not the lender, and are estimates in any event.

[renriq02]

The lender can credit your closing costs by raising the interest rate...

I'm not sure if you mean that they are paying you 'cash' at the closing table.

Originally Posted by LinusK

By 'negative points' I mean the lender pays me up-front, in exchange for a higher interest rate.

According to the 'mortgage professor' it's perfectly legal, and I can't think of any reason why it wouldn't be. Can Mortgage Points Be Negative?

The $235 is the difference between the lender fees. I'm not considering any of the other closing costs.

They are (or should be) irrelevant, since they are (supposedly) paid to third parties, not the lender, and are estimates in any event.

[LinusK]

Originally Posted by banker0679

The lender can credit your closing costs by raising the interest rate...

I'm not sure if you mean that they are paying you 'cash' at the closing table.

What difference does it make?

[renriq02]

You will need to speak to an attorney who is knows RESPA and state laws.

The problem is that a bank may do this as some banks dont sell their loans in the secondary market. Most lenders/banks sell their loans in the secondary market.

If you receive cash back at closing...the investor who purchases your loan may think that the price of the home was 'overinflated' to provide an incentive to you.

The only loan that I'm aware that provides money back on a 'purchase' transaction is the FHA rehab loan. (from the lender itself)

[killgja]

"negative points" can be one of two things. If the company is a broker, the higher rate is providing them with a yield spread premium for that loan. If the company is a correspondent lender, they get the funds from a service release premium when they sell the loan after closing/funding the deal themselves.

Correspondent lenders in almost all situations can offer a better deal than a broker because they are provided better pricing than a broker because they take on part of the risk associated with the deal. Once a broker has closed a deal their hands are clean from that deal while a correspondent lender must then sell it to a servicer on the backend and buy the deal back if it goes bad in the first six months. Generally, from what I have seen correspondent rate sheets are around 1/8th better than the broker rate sheets. This means their pricing for the same loan is around (.00125)X(Loan amount) better than what the broker would get from the same backend company. This works out to $125 better per $100,000 loaned.

In some situation this could work out to the customer getting money back at closing if the backend premium on the loan is high enought to cover all the third party costs and lender fees. If you want an example of how this works visit www.amerisave.com/partner/jmkillgo and you will be able to see a huge range of options. Some with upfront costs and others negative lender fees.

Originally Posted by LinusK

By 'negative points' I mean the lender pays me up-front, in exchange for a higher interest rate.

According to the 'mortgage professor' it's perfectly legal, and I can't think of any reason why it wouldn't be. Can Mortgage Points Be Negative?

The $235 is the difference between the lender fees. I'm not considering any of the other closing costs.

They are (or should be) irrelevant, since they are (supposedly) paid to third parties, not the lender, and are estimates in any event.