Mortgage Tips, Tricks & Secrets

…And How To Deal With Those Bad Mortgage Bullies Who Keep Stealing Your Lunch

Today let’s talk about those Ditech home refinance loans you’ve seen advertised all over television.

They start out saying, “people are smart, they deserve a low interest rate with no hassles” – or something very similar to that.

They say you get a flat closing fee of $395, and it appears that’s what your closing costs will be. Sounds really good too.

Of course, the fine print is so fine, and shows for only about 8.6 seconds – you never really get to see what it actually says.

Let’s take a moment to pick apart their online disclosure of the fine print and explain what is happening behind the scenes.

Here’s the disclosure in it’s entirety;

Rate is for a purchase loan. Fees & charges apply. Subject to underwriting approval. Not all applicants will be approved. Minimum credit score of 731 required to be eligible for advertised rate. Full documentation & property insurance required. Loans secured by liens against your property. Consolidating debts may increase the time and/or the total amount needed to repay your debt. Taxes & insurance extra. Terms, conditions & restrictions apply. For example, as of 2/22/08, a $250,001 loan amount financed at 5.75% interest (5.985% APR) for 30 years, with 2 point discount, would result in 360 monthly payments of $1458.94 Your rate and term may vary. Lock in fee required to secure rate. Recent rate but subject to change without notice. Rate available on loan amounts from $250,001 to (A) $417,000 (contiguous US) and (B) $625,500 (AK and HI) on owner-occupied single-family residential properties. Call for details.

Now, let’s pick it apart and explain what you’re really reading here.

Notice, when you view the low rate on their home page and click on it, it takes you to the disclosure and says, “for a purchase loan” which means of course, that’s NOT your refinance rate. Not a big deal but some would believe the rate applies across the board, it doesn’t

Then they say, “fees & charges apply” – hmmm, really! I call that covering your butt. Your question should be – what fees and charges apply. You’ll be surprised at the answer, if you get a straight one.

Oh ya, and “not all applicants will be approved” – is more real than you know. In fact what comes next essentially proves that statement correct.

Here’s a real kicker;

“Minimum credit score of 731 required to be eligible for advertised rate” – WOW! That’s an excellent credit score. How many people looking for home refinance loans have that high of a score? Not many (trust me! I know). In my experience most normal people have a score below 700, usually well below. It’s normal if you have ANY credit, any history at all. Especially since most are up against the credit bureaus simply not caring if they put something on your credit report that’s not exactly accurate.

Of course, there are ways to repair your credit and get it handled, but most either don’t know their options, try to write form letters or are skeptical about whether credit repair actually works (believe me, it works amazingly well, and can essentially only help and not hurt you at all). Avoiding the problem won’t allow your credit to fix itself. Paying off a bad debt isn’t always going to increase your score either. Letting a reputable credit repair company help you can and will make a difference if you can avoid the lies and myths about the whole industry.

Then they go on to say;

“Full documentation & property insurance required” – which means you cannot be self employed (typically), or have been at your job for less than 2 years as an example. So, you must be the “perfect” borrower and most borrowers have some sort of circumstance where they don’t always look “perfect” on paper.

I’m sure they also want you to prove, via your savings and assets that you don’t actually NEED the money or the loan. That’s always a depressing thought.

I like this one;

“Taxes & insurance extra. Terms, conditions & restrictions apply” – no kidding! I guess that flat refinance fee advertised on television (hey, they did say “purchase loan” right) didn’t include, well, really, anything. (Nice)

So that $395 fee is in ADDITION to ALL the other FEE$ then right?

You would be correct!

But wait…

What about those “2 discount points” to even get the advertised rate.

What that means is you will pay 2% of the loan amount in additional closing costs just to get the advertised interest rate.

On a $300,000 loan that adds an extra $6000 in closing costs.

AND..that’s in addition to the $395 flat fee, taxes and title, insurance, and most likely a broker fee (in the form of additional points, maybe) since you are paying discount points – they gotta make their money somewhere right.

Oh, and did you notice;

“Lock in fee required to secure rate. Recent rate but subject to change without notice.”

Oh, ya – a lock in fee. Well Mr./Mrs. borrower to lock your interest rate and make sure it doesn’t increase during the approval process we require a $750 interest rate lock fee. Up front. Before you’re approved. Right now. Get your credit card out. Oh ya, we’ll charge your appraisal fee for $350 to that also, oh ya, and the $50 application fee.

That’s $1150.00 extra, BAM!!!! Right up front.

Can they do that?

Abso-freaking-lutely!

Should you pay a “rate lock fee”????

I don’t think so. You’re welcome to, however the truth is most lenders let a broker lock an interest rate for free. The rate lock fee you pay is, well, a fee and it’s most certainly lining someone’s pocket.

The “lock” is more like a “LOCK you into doing business with them fee” – not really required to lock your interest rate.

Sure, there’s probably a lender or two who charge a lock fee, but it sure as hell isn’t $750. Oh, I’ll bet it’s not refundable either – maybe you should ask first, or read the fine print on that fee after you pay it and THEN you get the disclosure. Ooooopppsssss!!! too late then isn’t it.

Awwww, what the hell – you’re made of money right?!?!

Note: those readers that answered YES to that question please donate to my website fund, in large dominations (see the right sidebar for details).

I know, I sound all negative and cynical don’t I? (ok maybe a little), however what I’m trying to do here is HELP you dig into this concept of home refinance loans and have a deeper understanding of what is going on with all this stuff.

They’re not doing anything wrong, it’s all on the up and up – yet deceiving to the average (dare I say) Stupid Home Owner.

If you know what you are doing, you can call any local mortgage broker and NOT pay a red cent to have your interest rate locked.

You can pay 2 discount points also if you want.

You might possibly even get 5.75% if you have a credit score of 731+, and if you don’t’ have that high of a credit score – you can work with an excellent online credit repair company that will help you get there (whether you believe it or not).

You can probably even avoid the $395 flat fee if you understand how to ask for the right stuff.

In the end, it’s your fault if you don’t spend some time here at StupidHomeOwner.com to get this part of your life handled. I’ll be telling it like it is, over and over again until you get it. It’s high time someone offered you this insider info don’t you think!

You’ll laugh, you’ll cry and you’ll understand home refinance loans – then…together we’ll do what it takes to evict your inner Stupid Home Owner. Now go read some more and quit messing around.

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