At the end of October the was an article published in a San Diego Real Estate Blog about Bank of America doing away with their wholesale mortgage division. The article quoted officials at Bank of America saying that they would be concentrating on direct-to-consumer lending. The article went on to state that Bank of America had introduced it’s no fee mortgage program which would eliminate several hundred to a few thousand dollars in costs associated with closing a home loan.
At the time it was written, I stated that I have seen many instances in which a mortgage broker was able to offer better terms to a buyer than a Bank of America branch office. Guess what, this holds true today. Yesterday afternoon I went into a local Bank of America branch and saw on their bulletin board that they were offering 5.5% 30 year fixed rate mortgages. Wonderful, I thought. Here comes the kicker, the buyer had to pay 1.835 points to get the loan. Now what would that equate to on an average home? Let’s assume that the sale price of the home is $250,000 and the buyer is putting 20% down, that would leave a loan amount of $200,000. Now with 1.835 points (or 1.835%) the buyer would be charged $3,670.
A 5.5% interest rate on a 30 year fixed rate mortgage can be obtained through a morgage broker with out having to pay points. So the question is, why not utilize the services of a mortgage broker who shops various lenders every day in order to provide clients with the best possible terms available in the market.
{ 2 comments… read them below or add one }
Mack, as a real estate “professional” (and since you are a Realtor I use that term loosely) you are an idiot to think a mortgage broker will be cheaper than a bank. You think a broker could have gotten 5.5% on a 30-year fixed mortgage with no points, anytime in December? Nice try!
Getting kickbacks from any mortgage broker in particular? Ever heard of RESPA?
Chris – Welcome to my blog. Well you certainly know how to get on someone’s good side don’t you! To my knowledge we have never met, yet you choose to label me as an idot. For your information on December the 6th when this post was initially written we had, by the way I am also a loan officer and yes I am familiar with RESPA, 2 diiferent lenders with 5.5% 30 year fixed rate mortgages. You sound as though you are familiar with the business so I will ask you a question, Are you familiar with a yeild spread premium? Guess what, on December the 6th the 5.5% deal also had appro. .6 ysp. So my primary question to you would be, If you are in the mortgage business why do you need to make more than that .6 ysp.
Sure we have to make a profit to keep the doors open, I just elect not to try to retire off of and rip off my clients. For anyone reading this another important aspect to consider is that as a REALTOR, I enter into a written agreement with my clients spelling out how I am bound to protect their interest. Loan officers who are not REALTORS do not enter into any kind of written agreement of this nature.
As a final point in this comment I want to point out that I did not have to approve and publish Chris’s comment but I did for one reason. I wanted everyone who reads this blog to know that even though we may not agree on a certain issue I respect your right to your opinion. Just remember one last thing, the comments that I refuse to publish are generally all from drug distributors or adult sites.
Chris I welcome any follow up you may have and by the way let’s leave the name calling out OK.