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Wishing Your Family a Wonderful Holiday Season šŸŽ„šŸŽ šŸ”

Wishing Your Family a Wonderful Holiday Season šŸŽ„šŸŽ šŸ”

This time of year is great for creating cherished memories with loved ones and enjoying the warmth of home. We hope that your holiday season is filled with laughter, joy, and the special moments that make this season so magical. We Wish you a Merry Christ

Dec 23, 2024 |

Higher Loan Limits for 2025 Announced

Higher Loan Limits for 2025 Announced

Loan limits for 2025 are rising, opening up new possibilities for homebuyers across the nation. These limits, set by the Federal Housing Finance Agency (FHFA), determine how much you can borrow without stepping into jumbo loan territory. This year, they&r

Dec 19, 2024 | Purchasing a Home

Non-QM Loans: Flexible Home Financing for Self-Employed & Investors

Non-QM Loans: Flexible Home Financing for Self-Employed & Investors

There are an array of mortgage loans designed to fit the needs of the majority of borrowers. But what if you don't fit into the majority for one reason or another? This is where Non-Qualified Mortgage (Non-QM) loans come into the spotlight. These aren&rsq

Dec 17, 2024 | Purchasing a Home

The Inside Scoop on the Top 5 Mortgage Loan Types

The Inside Scoop on the Top 5 Mortgage Loan Types

Navigating mortgage options can seem overwhelming, but understanding the key types of loans available can simplify the process and help you make an informed decision. Here’s a clear breakdown of the top five mortgage loans to help you choose the one

Dec 10, 2024 | Purchasing a Home

How Long is a Mortgage Pre-approval Good For?

How Long is a Mortgage Pre-approval Good For?

As you stand on the threshold of homeownership, pre-approval letter in hand, you may wonder: How long will this golden opportunity last? Understanding the time-sensitive nature of your mortgage pre-approval can help you stay competitive in today’s f

Dec 03, 2024 | Purchasing a Home

Key Questions to Ask Your Mortgage Lender

Key Questions to Ask Your Mortgage Lender

The mortgage process is your roadmap to achieving the dream of homeownership. It’s an exciting journey filled with opportunities, critical decisions, and challenges along the way. To navigate this path successfully, open communication with your mort

Nov 26, 2024 | Purchasing a Home

Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā Ā  Donā€™t Get a Mortgage from a Company that has ā€œBankā€ in its name

When buying or refinancing a home, most people donā€™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 ā€œclosedā€, they realistically didnā€™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 lenderā€¦.. Blah, Blah, Blah!!!!!!), it is very difficult to understand what is the best path and the most sound financial decision when buying a home.

Ā Before the crash in 2009, everybody played the rate game with lenders, and whoever gave the borrower the best rate won. What most people didnā€™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 bankā€™s pocket. Well, that is not the case anymore. The best rate is not always the best decision. Since the controversial ā€œDodd Frank Actā€, 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 ā€œLender Creditā€. 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? Ā Ā 

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 couldnā€™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.Ā Ā Ā Ā Ā Ā Ā Ā Ā 

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 lenderā€¦.. 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. Ā 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