The Real Estate Consumer Thinks that because of their credit or current financial situations in the world ecomony that they have to pay a higher commission, a higher interest rate and in this the Hard Money Loan Guys make a whole lot of money off of you - the Borrower - the Consumer.
Hard Money, that's just it, it is Hard to Get which translates to the Real Estate Consumer as YOU Pay me more to find it for you and you pay over and over again.
The Money is so hard to get that you are willing to do what it takes to make it happen and the Hard Money Broker - is Laughing all the way to the Bank. And not just this month but EVERY single month for the life of YOUR Loan.
Commercial Loans and Hard Money Loans are typically higher interest rates, which translates as More Money for the Hard Money Placement Specialist. You JUST have to payer a higher interest for commercial loans Right? I mean that is Just the Way things Work. This is not true but all they need is for YOU the Consumer to Believe it is True and then they get that Big Fat Residual Paycheck.
If the Loan to Value Ratio Works Out then the Money will be there for your real estate Purchase. How Does the Loan to Value work out ?
There are many ways that the Loan to Value is Forced - seemingly illegally but also seemingy that the lenders PUSH the Hard Money Folks - and the Mortgage Brokers to get these loans closed as quick as they can, to PUSH them through.
The Lender seems to look they way alot and even encourage bad behavior such as "Seller's Contributions". The Lender Does Not really care they just want the loan, the Loan Guys they want the loan and as soon as all the paperwork of your loan is done then the Lender Sells your Loan to unsuspecting 3rd party who does not really know that it was somehow forced.
And that the Real Estate Value is NOT really there but instead all the players involved made it look that way. And By Players I men Hard Money Placement Broker, Mortgage Broker, Appraiser, Realtors, and anyone else in the Real Estate Transaction that had ANYTHING to do with Proving Value.
You Deserve to Know the Truth on this Stuff Folks.
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The borrower is just so happy to get the money coming to them, to get that house for their family or to get that commercial property that they agree to what ever the person getting them the money tells them they need to do to get it.
Next, there are hidden costs, paperwork fees, loan origination fees, and all kinds of hidden costs in the closing papers. However the Real Kicker is Not the Commission and All those "Upfront" fees the Mortgage Broker or Hard Money Placement Guy get, but it is the Trailing commission. Say your Commercial loan is for $700,000 - say the Hard Money Placement gets One Percent upfront plus a few Paperwork fees and whatever they convinced you was necessary. So say they made around $11,000 upfront.. Well They also make, the Difference in percentage of interest, say the REAL lender gets %5 as the Loan Product stated, and the MB convinces you that it really is %9 - then they the Middle Man - the Loan Processor - the Hard Money Loan Guy or whatever Type of Money Middle Person your using, THEY get 4% interest for the LIFE of the Loan, so if you Keep this Loan for say 10 years, then this Person gets a commission of $28,000 a year, that is around $2000 a month (yes a bit more but you get the point). Now times this by 10 years and even more if you use the same person to Re-Finance.
So ONE loan, every month part of your HUGE payment goes to this middle man, NOW had you went directly to the lender your loan would have cost less in the First Place and you Would NOT be Paying a Trailing Commission for the Life of the Loan and NO this does not have to be disclosed to you, it is between the Lender and the Mortgage Consultant - really none of your business - The Real Estate Consumer thinks that %9 is the Best they can get in their circumstance, and if the MB drags this out, then the Consumer is Stuck with them if they want the loan because a new lender may have to dip into the Credit Scores again and that causes a drop so the next time they may not qualify for the Loan... Quite a Legal Scam isnt' it?
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