Ask Anything About Mortgages

[Bicycles_Biatch]

Public service announcement... most Brokers are crooks... most loans that sound to good to be true... ARE

[JCool]

What are your credentials to start this thread?

If you are qualified to answer, how does the mortgage broker make money in a "no cost refinance"?

[Maulik]

JCoool,

When you're late on payments, interest?

[multious]

I own a mortgage company

[ItalianFX]

What sucks most about selling mortgages?

[Bodhisattva]

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What sucks most about selling mortgages?

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The innane humdrum coupled with invoking of ennui the job seems to set forth.

I was a broker for sometime.

[Bicycles_Biatch]

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What sucks most about selling mortgages?

[/ QUOTE ]

The competition... i'm all about free markets and capitalism... but it's gotten to easy (at least in CA) to become a loan broker. We are talking about people with NO financial backgrounds selling million dollar loan packages.

The CA market (especially SoCal) is flooded with upstart brokers that are doing anything and everything to stay afloat. Including shaddy business practices.

I'm a very honest loan officer and I'm straight up with my customers... that leads to several lost/cancelled deals. Most of these customers come back to me a month or two later after they finally realize that they were sold on a loan or cost structure that was just plain false.

I can't tell you how many customers I've sat with that blindly sign the paperwork because they feel ignorant, and they just trusted the broker. Meanwhile, when you actually read over the paper-work, they are paying a higher rate and cost structure than what I was originally offering.

People fall for it all the time... they think the grass is always greener on the other side... and they think somehow, someway, they found the deal of the century.

It's really bad right now with everyone offering 1% start rates.

[Bicycles_Biatch]

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I own a mortgage company

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I'm guessing Montreal (canada?) has much greater consumer protection clauses for mortgage borrowers up there...

for some reason, it's harder to certify a new toothpaste in America than it is to get a Broker license and deal with peoples financial well being.

[whodatdare]

Can you explain a balloon Mortgage to me? My broker lied to us (BIG SURPRISE0 and said we weren't in one until the closing attorney brought it up. Too late for is, as we had sold our house the previous day. Wht is the best way out of one? Thanks

[Bicycles_Biatch]

[ QUOTE ]
Can you explain a balloon Mortgage to me? My broker lied to us (BIG SURPRISE0 and said we weren't in one until the closing attorney brought it up. Too late for is, as we had sold our house the previous day. Wht is the best way out of one? Thanks

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Basically, a balloon mortgage is a mortgage where you are paying either interest only or sometimes LESS than the monthly interest due.

All this means is that at some point (1 year, 5 years, or even 30 years)... you are going to have to "catch-up".

Now, some loans consider "catching-up" just a matter of paying all the interest due... or, in some extreme cases, paying off the whole loan.

2 examples I can think of...

Scenario 1: (more common)

You have a negative ammortization loan (meaning your monthly payment of lets say $1,200 doesn't even cover your total monthly interest due of $1,400)...

That means that every month you are tacking on $200 to your mortgage balance. The loan will have a provision where-as you either have to payoff that deferred interest all at once (usually yearly or every 5 years) -OR- at the 5 year mark your payments will start to increase dramatically ... the bank basically gave you 5 years of low payments but now they want you to start paying down that deferred interest AND pricinipal.

Scenario 2: (a true Balloon payment)

You paid either a negative payment, interest only, or principal an interest (per loan terms)... and at the end of a particular time (5 years, 10 yrs, or 30 years)... you owe the WHOLE balance of you loan. Usually, unless you have several hundred grand laying around, this means you need to refinance.


I'm guessing since you are selling the house, you probably just found out about deferred interest that you owe... i.e the balance of your mortgage is more than the day you got it... does this sound about right?