Wholesale Lenders Can Pay Brokers to Send Them Loans

Mortgage brokers don’t lend money; they find money. And they find money from a group of mortgage companies called wholesale lenders. Wholesale lenders don’t make loans to consumers directly. Instead, they make loan programs available to mortgage brokers, who in turn ‘‘mark up’’ the interest rate to the retail level. The difference between the wholesale rate and the marked-up rate is how much money the broker makes. It’s not unlike any other wholesale/retail consumer product: Buy low, sell high.

Brokers can make more money on your loan with something called a yield spread premium, or YSP. Each morning, all wholesale lenders publish their interest rates for that business day. And while most of these rates will be the same, there might be a difference in how much each interest rate ‘‘costs’’ the mortgage broker.

For example, a mortgage broker will begin comparing interest rates from various wholesale lenders. The forte of a mortgage broker is that the broker has the ability to ‘‘shop’’ for the best mortgage rate by comparing the hundreds of lenders that the broker is signed up with.
But what the broker may really be doing is not finding you the best rate but finding himself the most money.

A broker can peruse the daily wholesale rate offerings and find three lenders offering a 15-year fixed-rate mortgage at 5.50 percent. The difference is not the rate; the difference may be the YSP. Lender A might offer a 1.00 percent YSP, Lender B might be offering
a 1.375 percent YSP, while Lender C is offering only 0.875 percent that day, all on the very same 15-year fixed-rate mortgage program. Remember, it’s the YSP that typically goes to the mortgage broker as its profit. So which lender do you think the broker is going to choose? Lender B.

On a $400,000 loan, Lender A pays the broker $4,000, Lender B pays $5,500, while Lender C can muster only $3,500 that day. Lender B gets your loan because the broker makes more money from it while you get the rate you were promised.

Is that mortgage broker going to give you back some of that money? No. Should she? I don’t think so, but others may disagree. If you agreed to a 5.50 percent interest rate and your broker locked you in at that rate, then you got what you wanted. Of course, a mortgage broker who picks up a few extra bucks because she found a slightly better deal at one of her wholesale lenders could certainly offer to give you some of that ‘‘extra’’ money, but she is not obligated to. Compare it to a retail store. If the store can cut its costs on a product, it can pass along the savings to you, but it is not obligated to do that.

Are There Poor Credit Home Loans Today?

If you were wondering if poor credit home loans still exist, then you will want to read this article. Specifically, we will discuss what has happened to bad credit mortgages, where you can go to get a mortgage if your credit is bad, and the best things you can do to improve your chances of qualification. After reading this article, you should have a good understanding of where bad credit loans are today.

A few years ago, if you wanted to buy a home but did not have good credit, you had many options. Mortgage professionals used to joke that if you could fog a mirror you could get a mortgage! There were sub-prime lenders who would lend to people with scores down in the 500'. Lenders offered 100% financing at good rates to people with scores down to 620. There were others who offered no doc and stated income loans. Unfortunately, the implosion of the mortgage market has changed that.

In today's mortgage market, people with scores below 620 have almost no options unless they have a sizable down payment or are looking to refinance and have a great deal of equity in their homes. Those with scores less than 700 but above 620 are looking to the FHA for mortgages. This is the best place to look for poor credit home loans in today's market. The benefits of going with FHA is that they will accept lower scores than other non-insured lenders and they place more of an emphasis on your recent credit file. Once you are approved, your interest rate is not generally impacted by your credit score.

If your score is less than 620, unless you have access to a significant amount of cash, you will need to work on improving your credit score. Fortunately, there are numerous things you can do. You will want to start by getting a copy of your credit bureau. You can get this for free at http://www.annualcreditreport.com. Once you have this report, you will want to go over it carefully and notice any errors or negative credit reporting that you feel is questionable. Pay attention to accounts that are reporting late, negative accounts reporting more than seven years after the date of last activity and your credit card limits. Starting with the two or three items that will have the most impact on your credit score, you will want to dispute these items with the three credit bureaus.

Once you have completed your first round of disputes, you will want to continue the process until you have corrected any errors on your report. While you are doing this, you will want to work on paying off as much revolving debt as you can. Paying each individual credit card to down below 30% of the limit is ideal. If you lack positive good credit, you may get a parent or spouse with good credit to add you as an authorized user to an account with a low balance.

While bad credit home loans are not as prevalent today, for people with scores over 620, they still exist. Those with a score lower than this will want to take steps to improve their credit score. Hopefully, you now have an understanding of where bad credit mortgages are today, and what your options are.

Wendy Black Polisi is the founder of creditrepaircollege.com. To learn more about poor credit home loans and credit restoration please visit her on the web.

Article source:
http://ezinearticles.com/?expert=Wendy_Black_Polisi

Ex-Wife screwed up your credit?

It is such a nice problem with you. But i tell you something, keep your divorce decree handy showing who the judge said was responsible for paying what. Getting divorced is a bad thing. What many people don’t realize is that the ex-spouse can mess up your credit report long after the ink is dry on your final divorce decree. I know, I know. The judge said he could have the house and the car and you could have all the credit cards, but if you applied jointly for the house and the car, the lender may, quite frankly, care less about your failed marriage. Lenders agreed to make a loan to both of you, whether or not your relationship worked out. If you split up, that doesn’t dissolve either person’s obligations to pay.


The judge may have the ability to assign credit obligations to either party in such a case, but the judge doesn’t have the authority to absolve either of you from paying someone back. Only the lender can do that. Let’s say you had bought a house together and the exspouse got the house while you signed a piece of paper agreeing to release all interest in the property. Fine. But there’s still a mortgage outstanding. Here’s where you need to be careful. If your ex-spouse is responsible for the mortgage and the car, unless you get off of the original loan you may still find late payments on your credit report. Let’s say you give away the home and sign a warranty deed to your ex-spouse. Unless the ex refinances the loan, the payment history might still appear on your credit report. That’s just the way it works. To compound the problem, if you needed both incomes to qualify for the original loan then the exmay not be able to qualify for a refinance in the first place. In this instance, not only do you need to release all interest in your old home to your ex, you must also have the original loan refinanced to get you off of the mortgage completely.

The same is true for the car and any other loans you might have obtained together. A divorce decree isn’t sent to the credit agency when you get divorced. If you’ve been divorced, you need to get your ducks in a row and review your credit report long before you apply for a mortgage.
Some loans make allowances for legal assignments for who’s responsible for what, and although those obligations may not be taken off of your credit report, any loans still in your name might not be considered. Keep your divorce decree. If you can’t find it, get a copy of it. While a divorce decree won’t erase joint obligations, for qualification purposes old credit items might be excluded from your application when it comes time to determine debt ratios.