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Monday, June 6, 2011

Banks will rip you off on your mortgage

By this, I mean chances are you'll do much better if you go with a mortgage broker.  When I was shopping for a mortgage (back in November 2010), I checked with several banks, including Wells Fargo, to see what their rates were.  They all quoted between 5 and 5.5 percent, and they typically had points associated with that.  I ended up going with a mortgage broker, and got a no point 30-year loan at 4.5% (yes, rates went lower after that, but that's what I got).  Anyway, a few days after I closed on the loan, it was sold to Wells Fargo. 

In other words, Wells Fargo uses its "good name" to get its loyal (and stupid) customers to buy a mortgage at about 1% above a "perfectly competitive" rate, but would also be more than happy to take over a mortgage at a much lower rate.  It's all free money to the banks, after all.  I"m only singling out Wells Fargo because they're the ones who actually bought my mortgage.  I'd be willing to guess the other big banks take the same approach (and I know for a fact that the rates that they charge their "customers" are much higher than those you'd get through a mortgage broker).

A great site for finding a mortgage broker near you is:

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