How mortgage brokers get paid

I am a mortgage broker. And I am not afraid of telling you how we get paid. Banks and lenders want to sell loans. The more they buy, the more they can sell to bulk mortgage investors. Whether banks sell loans in house or get mortgage brokers to sell them for the bank, the bank pays it's employees or mortgage broker a commission.

I once did a Michigan mortgage for a client. He asked which bank it was going through. I didn't think anything of it. He called me the next day and asked me how I could get a mortgage interest rate cheaper than the bank itself was giving out. He couldn't believe it!

Here is the secret. Banks and lenders sell mortgages to investors. They have to set mortgage interest rates according to what the bulk investors will pay that day for the mortgage. So what the bank and the lender do is send out rate sheets by email and fax to mortgage brokers.

For example a bank or lender may 1% of the loan amount for a 6.0% mortgage. Then they may pay 1.45% for a 6.125% mortgage. They may pay 2.5% for a 6.5% mortgage.

So the mortgage broker decides what he is willing to make on a loan. Some mortgage brokers like me work on volume and are willing to give a lower rate. Where other mortgage brokers may charge a little more. We as mortgage brokers represent 20 -30 banks. We see what they want to charge and we can shop your Michigan loan around.

Remember mortgage brokers and banks are getting a paid a percentage of the loan amount. So usually they like loan amounts over $150,000. Small loan amounts under $80,000 they do not make much money on and can be more trouble than they are worth. Think about it. 1/2% of $60,000 is $300 whereas 1/2% of $200,000 is $1000.

So know you know how banks, lenders, mortgage brokers make their money. That is why different places have different rates and closing costs. Sometimes mortgage brokers pay some of the fees out of their commission. Which is good for you the consumer. You can get a good rate and good closing costs. For more on Michigan mortgages go to my website www.RussRavary.com For Michigan things to do, Holiday trivia, Michigan facts, real estate tips, mortgage information. Or email me at OurMortgageGuy@yahoo.com for Michigan Mortgage rates

Michigan mortgage rates

Michigan mortgage rates are once again on the rise. The reason being is that investors are shying away from buying mortgages and mortgage back securities. Investors are wary of putting money into mortgages.

What that means to mortgage companies and consumers is that rates may continue to rise even though the Fed continues to cut the rates. You can see my article on the difference between the Fed rate and the mortgage interest rate at www.activerain/blogs/russravary It explains a lot why it happens.

The bottom line is that mortgage rates do not always go down when the Fed cuts the rate. Especially right now when big investors are afraid of buying mortgages. No pension fund manager want to take a chance on putting somebodies retirement at risk because of the mortgage fiasco. Not many foreign investors want to take the chance at this time either. What that means is that mortgages are getting harder for the banks and lenders to sell. Rates may continue to rise this year.

For more on Michigan mortgages, Michigan real estate go to my website www.RussRavary.com Search over 70,000 Michigan Homes for sale at your leisure. Email me for a Michigan foreclosure list in your city at info@RussRavary.com

Mortgage delinquencies and foreclosures continue to rise

According to an article on CNN Money Countrywide's Mortgage foreclosures and delinquencies continued to rise in January. Another article said that the median home price in Lansing, Michigan fell 18% to 109,600 in the fourth quarter of last year.

That is what I believe is in store for us all year. I believe home prices will continue to fall, there will be more foreclosures on the Michigan real estate market. I believe the overly optimistic stance by many realtors that the real estate market will start turning around in the last quarter of the year is wrong. It is going to take time to work out of this mess.

The fed may continue to drop the fed rate, but I don't know what affect it will have on the mortgage interest rates. They have dropped it quite a bit already, but as of today's mortgage rates are higher than when the fed dropped thefed rate the first time this year. For more on the difference between the fed rate and mortgage interest rates you can go to my other blog www.activerain.com/blogs/russravary look on the right hand side for "fed rate" or "difference between"

Gambling on whether mortgage interest rates will come down more is like gambling on whether a stock will go up on a certain day. If you can lock in a good mortgage rate lock it in, don't be a glutton waiting for the bottom. It may never come. Some "experts" believe the mortgage interest rates may go up instead of down. Who knows which way they may go, it is anybody's guess. For more on mortgages, Michigan foreclosures, or Michigan homes for sale go to www.RussRavary.com