Home Loans

Home Loans - Its A Jungle Out There

Home loans are a great benefit for you, the individual home buyer or owner:

• they free up extra cash for investments
• they ease your way to financial strength
• and they allow you to live in your desired home as you pay it off, rather than saving and buying.

But however beneficial a mortgage is for you it is doubly beneficial for your mortgage lender. This mission to to see how much your lender stands to make off your home loans, and how you can use that profit to your advantage.

Home loans - the great money making machines

Lets say you take out a home loan from a direct lender - Fanny Mae, Countrywide. The rates you will see are not the base rates found in the financial indexes, they are a combination of the indexed, or prime, rate and the profit, margin, the lender attaches to their home loans. For this instance, lets say your lender has as their prime rate determined by a two year treasury bill with constant maturity, and current levels of such an index are about 3.5%. For your $200,000 30-year fixed rate mortgage your direct lender places a 2% margin on top, so you are paying 5.5% which leads to $1,135.58 a month. Over thirty years thats gonna add up, and in the end you'll have paid $408,808.08, $208,808.08 of that in interest - more than the amount of your home loans! Of that your lender will take their share, about $60,000. Thats a huge profit, home loans are exceptionally lucrative.

Use their greed to your advantage

Rates are going up, so home loans are soon going to become even more expensive. You stand to make significant moves with this expense by making your lenders compete, by using their desire to profit off your home loans to secure lower rates for your personal benefit. Make them compete, find as many different lenders as possible and tell them all you are looking for home loans eslewhere - create that best deal on your own. Home improvement loans can make you feel like a million bucks!

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