Monday, September 19, 2005
How To Fix The Mortgage Industry
The Wenatchee real estate market, although small, suffers some of the same issues as any real estate market. The crazy housing market everywhere has made the business of shopping for and securing the right mortgage a little crazy as well. It's downright confusing.
Although it's entitled "How To Fix The Mortgage Industry", I was reading an article in my Inman News feed recently which really explains, in simplified terms, a little about how the mortgage industry actually works. The author does offer some suggestions for improving the system, which really isn't a sytem at all... but is a mass of independent contractors (mortgage brokers) vying for all the business they can get. Even though the loans themselves are provided through Federal guidelines, the loan fees are unregulated... and, therefore, leaves a lot of room for unscrupulous fees on the part of the mortgage brokers. There are, of course, Truth In Lending disclosures and you should pay close attention to them because it tells you how much the total loan is actually costing you (including all the fees).
I almost always read the "final settlement statement" for my clients before closing to analyze all the fees being charged by the mortgage broker and the lender. These fees are often excessive and can be negotiated. Of course the better time to negotiate is upfront before choosing a loan but, sometimes, they throw in these "junk fees" later and when you get to the closing table you don't feel in a position to be negotiating fees because you risk the deal falling through. I suggest you ask your escrow office to provide a final settlement statement at least 1 day before you are schedule to sign closing documents. You can compare this to your original "Good Faith Estimate" to be sure they're not charging you what we call "junk fees", which are just extra to create more profit for themselves.
My final comment is to shop for a loan just like you would shop for any large ticket item, and be sure you know all the fees involved. The "Good Faith Estimate" is your best upfront tool in comparing loans.
Have a great week,
Posted by Carol at 6:45 AM