817-236-2934
danielcason@att.net
Apply Now
Secure Doc Upload
Texas Mortgage Finance Logo

Questions?
Call Us at 817-236-2934

Apply Now

Contact Us

Blog

                                          Don’t Get a Mortgage from a Company that has “Bank” in its name

When buying or refinancing a home, most people don’t even know the first place to start the process. While some may know someone that knows someone, the majority turn to a bank that they have dealt with in the past or an advertisement they see on television for their first call. Others will turn to the internet and take a shot in the dark to see if they hit the target. Unfortunately for these people, after everything is said and “closed”, they realistically didn’t ever have a chance to really see the target. With all of the marketing gimmicks that you see (No closing costs, no money down, $5000 incentive if you pick this lender….. Blah, Blah, Blah!!!!!!), it is very difficult to understand what is the best path and the most sound financial decision when buying a home.

 Before the crash in 2009, everybody played the rate game with lenders, and whoever gave the borrower the best rate won. What most people didn’t realize was that the higher the rate, the more money the bank would make. This was called a yield spread premium. The higher the rate, the higher the yield in the bank’s pocket. Well, that is not the case anymore. The best rate is not always the best decision. Since the controversial “Dodd Frank Act”, the rules have changed drastically, and what most do not realize, this is what changed the game for consumers in a very positive way. Instead of the bank getting paid more when they charge a higher rate, now the homebuyer gets the paycheck the bank used to get to put towards their own closing costs. Yield Spread premium is now called a “Lender Credit”. This means that you can now decide on the rate that best fits your financial situation. For example, at 4% interest on a 30 year conventional mortgage the lender will pay 1% of the loan amount towards your closing costs. If the rate is moved to 4.25%, then the lender will pay back 1.25% of the loan amount. At 4.5% they may credit you 1.5% and so on. Based on a $100,000 loan the credits to you would be $1000, $1250 and $1500 respectively.

How does this help you?   

For someone that may have little money to put down at closing, taking a higher rate would enable them now to have the lender pay for some of the closing costs. On higher loan amounts, all of the closing costs can be paid by the lender. This enables many people that couldn’t buy a home before the crash to have many more options to be able to buy now because they do not have to bring as much money to the table.         

NOW HERE IS THE KICKER!!!!!

All of the gimmicks that I mentioned above (No closing costs, no money down, $5000 incentive if you pick this lender….. Blah, Blah, Blah!!!!!!), well those are all based on the Lender Credit. As a broker, I am required by law to disclose the amount of lender credit for each rate, but the banks are not.

What does this mean?

This means that the bank can hide the money from you and put it in their pocket. This is how they advertise no closing costs or special incentives to use them.  They are just raising your rate to cover everything without you having a say in what you want to do. If they are not offering incentives or showing a lender credit on your loan estimate, then, well they are just raking you over the coals. If you use a broker, that money is always yours, end of story.

The law has again allowed banks to be dishonest with your money. By using a broker, you will always know where every penny of your money is used.

Daniel Cason Lonestar Mortgage Solutions Texasmortgagedc.com

Blog Image: Will an Employment Gap Hurt My Chances for Mortgage Approval?

Will an Employment Gap Hurt My Chances for Mortgage Approval?

Employment history is a very important aspect of a mortgage application. Mortgage loans are usually for substantial sums of money and lenders want to reduce the risk that borrowers will default. One sign that a borrower will be consistent in making their mortgage payments is if they have a stable two-year history of employment. But what if you have gaps in your work history? Can you still qualify for a mortgage? Gap Period Most lenders will only require a two-year work history, so if you had gaps prior to that period, you may not even need to inform your lender about it. If you have had ...

March 11th, 2020 | Mortgage Advice, Will an Employment Gap Hurt My Chances for Mortgage Approval?

Blog Image: What Costs Can I Expect as a Home Seller?

What Costs Can I Expect as a Home Seller?

When you bought your house, the fees you paid included the closing costs for your mortgage, your down payment, and maybe some mortgage points. Now that you are ready to sell, there are a few more costs that you need to anticipate. In fact, according to Realtor.com, sellers often pay between 6% -10% of the sale price in fees and commissions. Real Estate Agent Commission Fees It is customary for home sellers to pay both the seller’s and the buyer’s real estate agent commission fees out of the proceeds of the sale. The standard rate is 3% for each, totally 6% of the sales price ...

January 15th, 2020 | Mortgage Advice, What Costs Can I Expect as a Home Seller?

Blog Image: Is a Bigger Down Payment Always Better?

Is a Bigger Down Payment Always Better?

In the homebuying process, if you find yourself in the enviable position of having more cash than needed for a minimum down payment, it may be difficult to know just how much you should put down. A larger down payment can bring plenty of benefits, but is it always best to contribute the biggest down payment possible?  First, remember that every loan program has its own down payment requirements. FHA loans for example require a minimum of 3.5% while jumbo loans will require at least 10%. To get a conventional loan without PMI you’ll need 20%. USDA and VA, by contrast, do not requi...

September 25th, 2019 | Purchasing a Home, Preapproval, Mortgage Advice, Is a Bigger Down Payment Always Better?