Mortgage 101
This is the story of how the mortgage industry works. You will discover:
- How the vast majority of broker/bankers make money off of you
- The info they really need to quote a rate (hint: your name, social security number, and home phone aren’t included)
- The clear advantage of using a transparent mortgage professional over an otherwise expensive lender
Vocabulary
Par Rate
The lowest rate you qualify for with a lender, beyond which you must pay “points” to reduce it. Sometimes slightly over or under, but always close to 0.
Yield Spread Premium (YSP)
YSP is a cash rebate paid by the banks, to the broker, as incentive for selling you a higher, undisclosed rate. Mortgage brokers are required to disclose YSP, but few explain it properly; most just pocket the rebate to pad their profits. On the other hand, bankers (e.g. DiTech, Countrywide, Lending Tree, etc.) are not even required to disclose YSP.
Transparency
In the mortgage context, the idea that every professional should have to disclose every dollar of YSP to the consumer.
True Cost
Broker/Banker Fees + YSP + Third-Party Costs (Title, Escrow, etc.) = True Cost
Just the Facts
A mortgage broker/banker does not need your name, address, phone, or social security number to price a mortgage. They collect this information so they can annoy you with phone calls at dinnertime and send you marketing spam disguised as a birthday card.
This is the list of what a bank actually needs to price a mortgage:
- Loan Type
- Loan Amount
- Property Type
- Property Use
- State
- Zip Code
- Value/Purchase Price
- Credit Score
- Income/Assets
- Monthly Debt
- Income Verification/Type
- Valid Email
When you provide anything more than an email address to get your results, you do so at your own risk.
Lesson Summary
RateSpeed‚ is more than just another mortgage rate shopping tool; it’s a community of ethical professionals committed to transparency, service, and efficiency.
LICENSED RATESPEED‚ AFFILIATES HAVE NO ABILITY
TO MANIPULATE RATES OR HIDE COSTS & FEES.
