Your Bank may seem like a convenient way of refinancing your mortgage loan; however, Banks have secret when it comes to disclosing information about their fees and markup. If you choose mortgage refinancing with your bank you are guaranteed to pay too much for that loan. Here are several reasons you should avoid Banks altogether when mortgage refinancing.
Mortgage lenders make the majority of their profits selling their loans on the secondary market to a variety of investors. Bank originated mortgage loans have the same markup as retail mortgage loans with one distinction. Banks fund their loans with their own money before selling the mortgage on the secondary market. The problem with taking out a mortgage from your Bank is that they are not required to disclose any of this markup due to loopholes in the Real Estate Settlement Procedures Act.
While banks are a convenient way of getting a new mortgage and are much less likely to try and use high pressured sales tactics on you, you are limited to the Bank only mortgage products. In addition to having fewer choices, your bank is much less likely to negotiate over interest rates and fees. Your banker will show you their rate sheets and which loans are available, and your choice is pretty much take it or leave it.
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Bank mortgage rate sheets also have Service Release Premium built into their interest rates. Banks mark up wholesale interest rates to boost their profits when selling your loan. Because your Bank is exempt from the Real Estate Settlement Procedures Act that requires mortgage lenders to disclose this markup, the only ones that know how much they are overcharging you is the Bank. Because traditional mortgage companies and brokers have access to wholesale mortgage interest rates and are more likely to negotiate over markup and fees, you should never take out a mortgage loan from your Bank.
You can learn more about your mortgage options, including costly mistakes to avoid by registering for a free mortgage refinancing video tutorial.
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