The Trick To Saving Thousands On Your Next Mortgage: A Rebate

Whether shopping for a new mortgage or just refinancing an existing mortgage it really pays to shop around. A couple of weeks ago I posted an article on how to go about shopping for the lowest cost mortgage, laying out a strategy for putting all your options on a level playing field for easy comparison. However, I left out one key trick that is essential for getting the best deal: getting a commission rebate from a mortgage broker. It deserves it’s own blog post.
It’s a little known fact but, just like you can get a commission rebate on a home purchase, you can also get a commission rebate on your mortgage if you are working with the right mortgage broker. Paul Braker is just such a mortgage broker and he’s been explaining to me how he uses a portion of his commission to cover the borrower’s up front costs:

I’ve refinanced people for free, I’m not kidding. All they had to do was fund escrows which aren’t a hard dollar cost anyway. No, I did not sell them a higher rate to get a premium from the lender or roll anything into the mortgage. I’ve dropped them by a point or more under par without a single dollar in cost. I make less, but I still get paid and clients are happy and refer more clients, everybody wins. This is not talked about by many mortgage brokers nor is it advertised often. Residential Mortgage Brokers are the only ones that can build deals this way.

The concept works the same whether the borrower is getting a new mortgage for a home purchase or just refinancing an existing mortgage. The only difference is that the closing costs are much higher on a purchase so the mortgage broker won’t be able to cover all the costs.
The key to taking advantage of this trick is to just make sure you understand all the up front mortgage closing costs for each of the lenders you are considering. And make sure you normalize them all to the same interest rate – just like I suggested in my previous blog post. Then factor in the commission rebate. So you may be talking to one lender that has a higher rate that then translates into higher up front costs once you factor in the buydown but actually ends up being cheaper after a commission rebate.
#HomeBuying #Mortgages #MortgageShopping
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

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