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

The outlook for 2007

The outlook for 2007 is unpredictable at this time. If somebody tells you that rates are going down in August they are just guessing.
Mortgages are now being sold on Wall Street. They are being bundled up in large groups and being sold as investments. Hedge funds and mutual fund even buy them. So rates are about as unpredictable as the stock market. There are many factors that cause the rates to go up and down. Economic conditions play a large role. How earnings come out, Whether the unemployment numbers are up or down, whether new housing starts are up or down. What economist's predict the inflation rate to be in the future, what the Federal Reserve says. All these things sway the rates daily and sometimes twice a day.
Every day the rates change according to the market. Just because a mortgage person told you the rate was 6% last week does not mean that it is 6% today! I have seen rates change as much as .25% in a day. If you are unsure of whether the rate is going up or down it is wise to lock in the rate.
Many times the broker or lender can switch banks if the rate goes down. Many loan officers won't tell you that because it means a lot more work for them. It also means that you are starting all over again from the beginning. Sometimes you even have to re-sign all the papers. So if you are in a rush or have a time frame you may not be able to get that lower rate because of the time it takes to re do the loan.
When a loan officer does this for you he is going out of his way. ( Who wants to do the extra work for the same pay?) Be sure to thank him.
If you want more information on mortgages go to www.russravary.com