I asked my lender to modify my loan by fixing my introductory rate on my adjustable mortgage.?

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I was told that this would have a negative affect on my credit report and my score. Is this true? How would this effect my credit history?
I am current on my payments but am worried that I will not be able to afford my home when the rate resets. I am currently at 5.6% and cannot refinance because I owe more than my appraised value.

I’m a CPA but am not entirely sure how the mortgage brokering process works. I’ve received some sketchy information in the past indicating to me that the higher the rate is, the more of a commission the bank pays to the broker for bringing them the loan. I believe the exact terms are when the rate is above the bank “par rate”. Now I’ve heard that if the broker brings the bank an adjustable rate loan that the broker receives and even higher Commission. Is this true?

Thanks,
Craig R. Fechter, CPA

5 Comments
  1. Reply
    kemperk
    January 31, 2011 at 1:09 am

    negative effect? BS.
    In business, everything is
    SUBJECT to negotation and
    re-negoation; it does mean the
    other party has to like or agree to your
    terms but you are free to make
    any offer. “the Donald” Trump
    became famous for getting
    lenders to re-negotiate.

    Naturally, what you have to offer them
    has to entice and benefit them.

    luck!

    [if you are behind, that is another
    story but the negotiation is not
    related to credit]

  2. Reply
    jaws21
    January 31, 2011 at 1:22 am

    the only way that it will have a negative effect on your credit is if they put you in a forbearance agreement; however, you will have to be behind on your payments before this can happen.
    Also as far as your current lender giving you a fixed rate, well it is easier to say it than to actually do it. The only lender that is actually doing so is CountyWide, they are helping homeowners by extending the adjustment date for their loans, I think they gave them 2 extra years, again I have not seen one myself.
    You should pay HUD.com a visit, pick your state and after that search for “Mortgage Resolution” there should be an approved agency in your area and go to them, they will help you with more details as far as what the lender can actually do for you rather than just taking their word.

    Good luck to you..

  3. Reply
    lb_centaur
    January 31, 2011 at 2:09 am

    Yes. Their commission comes from the rate spread. Adjustable mortgages and all those fancy instruments have higher yield spread premiums.

  4. Reply
    George
    January 31, 2011 at 2:38 am

    Unless you have a fixed-rate mortgage, the current mortgage interest rates are very important to deciding how much you should pay every monthcompanies offer different interest rates so it is a good idea to shop around for the best deal before settling on one particular lender.

  5. Reply
    Mortgage Expert
    January 31, 2011 at 3:31 am

    It is true that the broker gets paid for an above par rate but not true that they are paid more for an adustable rate. The reason that some brokers and lenders for the matter push an adjustable rate is that it is lower than a fixed rate and “easier to sell”. It’s unfortunate but many loan officers are just sales people and will sell what they think is easiest instead of what is best for you.

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