Mortgage Tips, Tricks & Secrets

In a recent post I talked about reasons you just may be a Stupid Home Owner, and now I want to elaborate on one of the top ten things that cause stupidhomeowner syndrome.

I had mentioned that you just may be a stupid homeowner if you approach the mortgage loan shopping process with the idea that getting the lowest interest rate is your only goal.

First off it’s really important to understand the mind set you’ve been conditioned to have about mortgage interest rates.

I know you’ve watched T. V. and seen the commercials which make the statement “when banks compete you win” – and it seemed to make sense, however you’re forgetting it’s just an advertisement and it’s not really how it works.

When I say it’s not really how it works, here’s what I mean. There’s an underlying business plan behind the “when banks compete you win” slogan, and it’s designed to make the business that uses it millions of dollars.

Here’s how their business plan works. Each person applying for a mortgage or refinance loan completes a form online and that information is sold to between four and twelve mortgage brokers. Whichever loan officer or mortgage broker closes your loan then owes a fee of approximately $1,000.00 to the company that sold him the information in the first place.

Now if that’s not an incredibly profitable business plan I don’t know what  is (they sell your info 12 times, then make money when the loan closes). When your mortgage loan request is thrown out to a group of hungry mortgage loan officers and the feeding frenzy begins, whomever sold your mortgage loan request information is bound to make a lot of money. Not only on the sale of your information but also when your loan closes.

Yes I agree that it can feel good to have ten banks all competing for your business however you as the consumer have come to believe it’s in your best interest – and that it’s also the best way to get the lowest interest rate. In theory it sounds great. In reality it’s a scary thought if you know anything about what goes on behind the scenes.

Most people have no clue what is really happening when YOU as the consumer get sucked into the “lowest interest rate” mentality.

To explain this hidden concept I decided to make an audio message explaining what is REALLY going on behind the scenes when you shop for the lowest mortgage loan interest rate and when you pit banks (or mortgage loan officers) against each other to compete for your business.

Here’s the Refinance Plan I recommended in the audio above.

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