Hard Money Lender, are compensated for the work they do in two ways.
The Old Bait and Switch: This is the most common trick played on borrowers. Usually the mortgage broker will advertise and extremely low rate. Borrowers respond to this advertising and find out that the low rate offered is either on a short term ARM or that it will cost the borrower thousands of dollar in points and fees to buy the rate down to the low level.
This is important to determine if the Mortgage Broker, is actually a broker and not a broker-bank. Broker-banks are exempt from RESPA legislation that protects homeowners from predatory lenders and will overcharge you for the mortgage every time. You only want to work with a mortgage broker that does not close in their own name
Hard Money Lender, are compensated for the work they do in two ways. Your mortgage broker will charge you an origination fee that you will be required to pay at closing. This origination fee is a source of confusion for many homeowners because they do not know what a reasonable origination fee should be. If your mortgage broker charges you more than one percent of the loan amount you are refinancing in origination fees or points
you should question your broker as to the validity of this fee.
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