Comments on: Don’t Get Taken Advantage Of By Your Mortgage Broker http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 21 Nov 2009 13:00:57 -0800 http://wordpress.org/?v=abc hourly 1 By: Around the PF Blogosphere: June 1, 2007 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-378605 Around the PF Blogosphere: June 1, 2007 Fri, 14 Nov 2008 05:32:08 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-378605 [...] AllFinancialMatters says don’t get taken advantage ff by your mortgage broker. [...] [...] AllFinancialMatters says don’t get taken advantage ff by your mortgage broker. [...]

]]> By: LostinDaSauce http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-177824 LostinDaSauce Sat, 24 Nov 2007 23:32:13 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-177824 Just wanted to make a mention of what is really happening to some of us trying to refinance today. I have a FICO score in the low 700's with a few mortgage lates. I need to buy out my EX [who didn't mentioned he wasn't making his half of the mortgage payments, hence the lates] the loan is for $300K, I came across a broker who said he could get me a loan. I was thrilled. People around me suggested I request a GFE from him. Not knowing diddley sqwat about how it all works, I was amazed by their reaction to the $22K closing costs he had listed on the GFE. This is what I have to look forward to today in seeking a mortgage broker. All I have to say is "GOD BLESS" The Honest Hard Working Broker cause their isn't too many of you around. Where ever you are! Just wanted to make a mention of what is really happening to some of us trying to refinance today. I have a FICO score in the low 700’s with a few mortgage lates. I need to buy out my EX [who didn't mentioned he wasn't making his half of the mortgage payments, hence the lates] the loan is for $300K, I came across a broker who said he could get me a loan. I was thrilled. People around me suggested I request a GFE from him. Not knowing diddley sqwat about how it all works, I was amazed by their reaction to the $22K closing costs he had listed on the GFE. This is what I have to look forward to today in seeking a mortgage broker. All I have to say is “GOD BLESS” The Honest Hard Working Broker cause their isn’t too many of you around. Where ever you are!

]]> By: Q Yuan http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-120990 Q Yuan Mon, 16 Jul 2007 03:08:08 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-120990 When you do re-finance, make sure you look for no-cost refinance. Most brokers "cheats" by adding all the fees to the original loan amount and claims they offer "no cost refinance". Believe it or not, there are real no cost refinance options. That is, your load amount will stay the same, while you rate will go down, and you don't pay any closing fees whatsoever. I did a series of no cost refinance during 2000-2004 period, and brought my original 10-1 ARM from 7% to the current 15-year fixed at 4.625%. The last refinance happened around 2003 time frame. Like a stock market, it is impossible for anyone to pinpoint the lowest point. So the way to play into it is to lock into lower interest multiple times, using real no cost refinance. This is exactly what I did. I refinanced for about 5 times before I settled for the last and the best rate. At this rate, who wants to pay off the mortgage? The online banking rate is even higher. When you do re-finance, make sure you look for no-cost refinance. Most brokers “cheats” by adding all the fees to the original loan amount and claims they offer “no cost refinance”. Believe it or not, there are real no cost refinance options. That is, your load amount will stay the same, while you rate will go down, and you don’t pay any closing fees whatsoever. I did a series of no cost refinance during 2000-2004 period, and brought my original 10-1 ARM from 7% to the current 15-year fixed at 4.625%. The last refinance happened around 2003 time frame. Like a stock market, it is impossible for anyone to pinpoint the lowest point. So the way to play into it is to lock into lower interest multiple times, using real no cost refinance. This is exactly what I did. I refinanced for about 5 times before I settled for the last and the best rate. At this rate, who wants to pay off the mortgage? The online banking rate is even higher.

]]> By: Brian Brady http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-116745 Brian Brady Thu, 28 Jun 2007 07:13:36 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-116745 Great article here. The WSJ article you cite is actually a page from the Jack Guttentag's playbook. A few problems I might like to point out to you: 1- Home equity is a poor investment. It doesn't pass the test for liquidity, safety, or return. Wealthy people have alwyas used debt, especially tax-advantaged debt to their advantage. Consider, as a financial planner, the benefits of equity segregation for arbtrage (eg- borrow at 4% after-tax and invest for 7% after tax) 2- Jack Guttentag lost a whole bunch of credibility when he advocated government regulation for flat mortgage broker fees. His advice is pr price-fixing and doesn't account for the value of advice and performance (Kind of the same problem financial planners have) 3- Mortgages are hardly a commodity. ARMs are historically the cheapest mortgage a homeowner can get and offer an excellent opportunity for arbitrage (rates rise, stocks rise). I try very hard to educate clients about how to use their mortgage as an effective way to increase their wealth. It ain't always easy, especially with the bad apples in my industry. Great read! Great article here. The WSJ article you cite is actually a page from the Jack Guttentag’s playbook. A few problems I might like to point out to you:

1- Home equity is a poor investment. It doesn’t pass the test for liquidity, safety, or return. Wealthy people have alwyas used debt, especially tax-advantaged debt to their advantage. Consider, as a financial planner, the benefits of equity segregation for arbtrage (eg- borrow at 4% after-tax and invest for 7% after tax)

2- Jack Guttentag lost a whole bunch of credibility when he advocated government regulation for flat mortgage broker fees. His advice is pr price-fixing and doesn’t account for the value of advice and performance (Kind of the same problem financial planners have)

3- Mortgages are hardly a commodity. ARMs are historically the cheapest mortgage a homeowner can get and offer an excellent opportunity for arbitrage (rates rise, stocks rise).

I try very hard to educate clients about how to use their mortgage as an effective way to increase their wealth. It ain’t always easy, especially with the bad apples in my industry.

Great read!

]]> By: Desa http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-115123 Desa Fri, 22 Jun 2007 08:14:16 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-115123 Great piece of info. Thanks Great piece of info. Thanks

]]> By: Tom Allen http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-110636 Tom Allen Tue, 05 Jun 2007 17:34:40 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-110636 It's always amazing that so many people have mortgages but do not really understand the process properly or how they might be taken advantage of. Excellent post and a great eye opener for anyone who hasn't looked at the details of their potential mortgage lender closely enough. It’s always amazing that so many people have mortgages but do not really understand the process properly or how they might be taken advantage of.

Excellent post and a great eye opener for anyone who hasn’t looked at the details of their potential mortgage lender closely enough.

]]> By: David A. Porter http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-109248 David A. Porter Sun, 03 Jun 2007 01:02:36 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-109248 PS Congratulation on your blog! You are an AWESOME blogger dude! 650,000 visits! You rock! Now that my friend is something you should be giving advice on and people will pay you handsomely. Oh...and I don't recommend that you be the lowest price blog coach. You have viewer count that few bloggers do. You have earned and deserve to be paid for all your hard work and experience. If someone want cheap blog advice, let them hire some one who only has 500 viewers. I bet there is a blog expert out there with only 500 views who has the gall to call himself an expert and he would probably say to you...better get an upfront quote first! Love you man! PS Congratulation on your blog! You are an AWESOME blogger dude! 650,000 visits! You rock! Now that my friend is something you should be giving advice on and people will pay you handsomely. Oh…and I don’t recommend that you be the lowest price blog coach. You have viewer count that few bloggers do. You have earned and deserve to be paid for all your hard work and experience. If someone want cheap blog advice, let them hire some one who only has 500 viewers. I bet there is a blog expert out there with only 500 views who has the gall to call himself an expert and he would probably say to you…better get an upfront quote first!

Love you man!

]]> By: David A. Porter http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-109246 David A. Porter Sun, 03 Jun 2007 00:54:05 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-109246 JLP, I know it is fun to bash the mortgage industry these days. After all, we just went through a tumultuous time of significant volumes and it seems that every low life on the planet got into the mortgage business. However I think that you should give some pause before you recommend to your readers what ever you can find on the planet to publish. You work for UBS and if everyone followed your advice, UBS would not be here tomorrow. I can tell you from experience that my UBS advisor was NOT the best deal on the planet. I used him because I could trust him, he had 8 times more money then I did in the market, and he was always honest with me. He managed money for billionaires so I figures he might now something that I didn't and I was willing to pay him for it. And trust me...he didn't get his information from journalists. If you had a brain tumor, would you be looking for the lowest cost brain surgeon? If you were wrongfully accused of murder, would you be looking for the cheapest attorney? Come on JLP, I like you but quit following this incessant cry of the masses to constantly find the cheapest. If you are buying a toaster, then fine...find the cheapest. But when it comes to a trusted adviser, helping you make the most important decisions of your life, how can you advise this approach? If I called you tomorrow and said that I expected you to match a trade price of $7 per trade what would you say? I would hope not! At UBS you had better learn to be better than the broker at Schwab or you will be out of business. Just as a $7 dollar per trade would be an insult to you and make a commodity of you, I would ask that you quit advising your loyal readers to go for the cheap in financial services. Going for the cheap in financial services will only bring you ruin AND you will never have a lifelong relationship with someone because the cheapest doesn't translate well in financial services. Please understand that I am NOT talking about price. Charles Schwab does very well for people who want cheap. But the beaches are littered with people making their own decisions and following the advice of $50,000/year journalists. You need a mortgage then work hard to find the best darn mortgage broker you can find. Check their references. If they are more expensive, then why would you pay them more. Ask them that! If you don't like the answer then...run and run fast! I can tell you that over 20 years and 7,000 loans, people did not use me because I was the cheapest. People used me because I listened to their needs, and found the best solutions in the marketplace for them. In fact, I took their "cheapest deals" and put them in my spread sheet and let THEM see how horrible these good deals were. JLP, you are slapping the face of every professional financial services provider. You look at any financial service provider... the best and the cheapest NEVER meet. Please quite advising your readers to work with the worst in the financial services industries. I hope and pray that you will consider this and please take this in the spirit in which it was intended. JLP,

I know it is fun to bash the mortgage industry these days. After all, we just went through a tumultuous time of significant volumes and it seems that every low life on the planet got into the mortgage business.

However I think that you should give some pause before you recommend to your readers what ever you can find on the planet to publish.

You work for UBS and if everyone followed your advice, UBS would not be here tomorrow. I can tell you from experience that my UBS advisor was NOT the best deal on the planet. I used him because I could trust him, he had 8 times more money then I did in the market, and he was always honest with me. He managed money for billionaires so I figures he might now something that I didn’t and I was willing to pay him for it. And trust me…he didn’t get his information from journalists.

If you had a brain tumor, would you be looking for the lowest cost brain surgeon? If you were wrongfully accused of murder, would you be looking for the cheapest attorney?

Come on JLP, I like you but quit following this incessant cry of the masses to constantly find the cheapest.

If you are buying a toaster, then fine…find the cheapest. But when it comes to a trusted adviser, helping you make the most important decisions of your life, how can you advise this approach?

If I called you tomorrow and said that I expected you to match a trade price of $7 per trade what would you say? I would hope not! At UBS you had better learn to be better than the broker at Schwab or you will be out of business.

Just as a $7 dollar per trade would be an insult to you and make a commodity of you, I would ask that you quit advising your loyal readers to go for the cheap in financial services. Going for the cheap in financial services will only bring you ruin AND you will never have a lifelong relationship with someone because the cheapest doesn’t translate well in financial services. Please understand that I am NOT talking about price. Charles Schwab does very well for people who want cheap. But the beaches are littered with people making their own decisions and following the advice of $50,000/year journalists.

You need a mortgage then work hard to find the best darn mortgage broker you can find. Check their references. If they are more expensive, then why would you pay them more. Ask them that! If you don’t like the answer then…run and run fast! I can tell you that over 20 years and 7,000 loans, people did not use me because I was the cheapest. People used me because I listened to their needs, and found the best solutions in the marketplace for them. In fact, I took their “cheapest deals” and put them in my spread sheet and let THEM see how horrible these good deals were.

JLP, you are slapping the face of every professional financial services provider.

You look at any financial service provider… the best and the cheapest NEVER meet. Please quite advising your readers to work with the worst in the financial services industries.

I hope and pray that you will consider this and please take this in the spirit in which it was intended.

]]> By: Chris http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-108971 Chris Fri, 01 Jun 2007 23:23:48 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-108971 Jefferson, you mean not to use a broker? That's great advice. I went through a broker, some online 'discount' brokers, and called 2-3 banks directly. I ended up getting a mortgage through one of the banks that I contacted directly. I don't think a mortgage broker is necessarily bad, as it was just one other mortgage option (and I was trying to access all my options), but definitely contacting banks directly is a smart plan. Jefferson, you mean not to use a broker? That’s great advice. I went through a broker, some online ‘discount’ brokers, and called 2-3 banks directly. I ended up getting a mortgage through one of the banks that I contacted directly.

I don’t think a mortgage broker is necessarily bad, as it was just one other mortgage option (and I was trying to access all my options), but definitely contacting banks directly is a smart plan.

]]> By: Jefferson Otwell http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/comment-page-1/#comment-108932 Jefferson Otwell Fri, 01 Jun 2007 20:19:21 +0000 http://allfinancialmatters.com/2007/06/01/dont-get-taken-advantage-of-by-your-mortgage-broker/#comment-108932 I'm an Upfront Mortgage Broker. The Mortgage Professor's Upfront Mortgage Brokers now have their own website: http://www.upfrontmortgagebrokers.org/. Chris shopped around for his mortgage lender while Rob speaks to the need "to shop around". I have found that when retaining a professional or specialist -- doctors, attorneys, roofers, mechanics -- that I prefer to shop for the specialist and then let him or her do the job. There is almost nothing a mortgage broker can do for you that you cannot do for yourself with many long hours of studying and shopping. Shopping is the essential part -- whether you shop for the service or the service provider seems to be a personal choice. I’m an Upfront Mortgage Broker. The Mortgage Professor’s Upfront Mortgage Brokers now have their own website: http://www.upfrontmortgagebrokers.org/.

Chris shopped around for his mortgage lender while Rob speaks to the need “to shop around”. I have found that when retaining a professional or specialist — doctors, attorneys, roofers, mechanics — that I prefer to shop for the specialist and then let him or her do the job. There is almost nothing a mortgage broker can do for you that you cannot do for yourself with many long hours of studying and shopping. Shopping is the essential part — whether you shop for the service or the service provider seems to be a personal choice.

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