Ditech : Mortgage Buyer Advice

The term mortgage buyer refers to people or a group of people that purchase mortgage notes from various lenders. The selling of a mortgage note is often a good solution for both the mortgage buyer and the lender. Lenders choose to sell their mortgage for various reasons such as urgent cash requirement or simply relieving themselves of the stress of managing the mortgage related issues. Mortgage buyers are able to purchase the mortgage notes cheaply and intend to make a profit by selling the property at a higher rate.

Lenders can either sell the mortgage note in full or in part. This means if a lender requires money urgently, the mortgage can be sold for a specific period of time. For this period, a lender receives a lump sum amount in exchange of which the mortgage buyer is allowed to collect the payments from the debtor. After the period is over, the lender can go back to collecting the usual periodic payments from the borrower. When the mortgage note is sold in full, the amount received is more than what the lender would have got on a partial sale.

A mortgage buyer generates the profit by paying a lower amount lower than the worth of the property and selling it at the same or higher price. In case of partial mortgage note purchase, the mortgage buyer pay the note holder an amount less than the total worth of the payments and collects the full payment from the debtor. This again enables the mortgage buyer to earn a profit. If the debtor is paying regularly and honoring the contract, the mortgage buyer faces very little risk. However, if the debtor is a defaulter or is not able to abide by the contract due to any reason, the mortgage buyer is forced to accept the loss.

The rate at which the mortgage is being paid also determines the amount of profit the mortgage buyer will make. Fixed rate mortgage is less risky than variable rate, though in case of rise in interest rates, even variable rates will spell profits for the mortgage buyer.

Ditech : Mortgage Refinancing – Win Smart Win Ugly Strategies to Getting the Best Mortgage Rate

Qualifying for the best rate when mortgage refinancing will save you money and lower your payment amount. Mortgage companies want you to overpay as much as possible; knowing how to refinance without paying their markup of your mortgage rate will help you qualify for the best interest rate when mortgage refinancing. Here are several “Win Ugly/Win Smart” strategies to help you avoid paying too much for your next mortgage loan.

Mortgage companies and brokers routinely mark up the mortgage rate you qualify for to boost their profits. This retail markup of your mortgage rate is called Yield Spread Premium and can result in paying thousands of dollars in unnecessary mortgage interest every year. Your Mortgage Company or broker marks up your interest rate because they receive a bonus from the wholesale lender for overcharging you.

How can you avoid paying Yield Spread Premium when mortgage refinancing? Tell your mortgage company or broker you will pay reasonable (no more than 1.5%) origination fees, loan processing fees (no more than $400) and closing costs. Tell them you will not pay their retail markup or Yield Spread Premium on your mortgage rate. Ask to see the original guarantee of your interest rate from the wholesale lender.

If the mortgage company or broker refuses to show you the wholesale lender’s guarantee, find another mortgage company that will. Treat these people like used car salesman and you will avoid the majority of mistakes homeowners make when mortgage refinancing. You can learn more strategies for refinancing your mortgage loan without overpaying by registering for a free mortgage tutorial.