A Simple Way to Save Thousands on Your Mortgage Charges
How many times do you check you restaurant bill? If not often,
I would advise you to do it more, especially when dining on your
overseas vacations. Still, much more Americans check their
restaurants bill, than the number of homebuyers, who check the
charges for their mortgages.
There are two popular misconceptions about the mortgage
surcharges. First - the charges are all the same because of the
competition. Second - there is nothing we can do about it, so why
They are both wrong. The charges vary, sometimes within the
same company depending on who their customer is. And yes, you can
reduce those charges substantially just by asking about them.
There us an old story about a waiter, who presents
unreasonably high bill at the end of a meal. His customer asks
very politely to see the itemization of the charges. He goes over
the items with the waiter one by one. Salad, yes, we had salad.
Steak, yes, we had it. What is 'successful' for $95? I don't
remember ordering it. Shrugging his shoulders the waiter crosses
the item out from the bill: "Most of the time I am successful
with that one, but sometimes I am not".
You will be surprised how often this old joke is played on the
unsuspecting customers at the mortgage closings. You can say:
"But I always check the charges myself. There was nothing like
that on my list".
Yeah, you think they would be stupid enough to put the charges
in the open where you can check them? No, the charges are buried
in the computations of the interest and principal payments. Those
computations formulas are among the most closely guarded secrets
of the lenders.
The lenders even have a special abbreviation for such charges,
P.O.C., which stands for Paid Outside of Closing. Those charges
can be for anything, from a finder's fee to your broker (or
whoever referred you to them) to different sorts of mortgage
insurance, which you are required to pay for, but it benefits the
They will fight you tooth and nail, if you ask them to
disclose that. Their most common answer to you would be: "Oh, we
don't know the details ourselves. Our computer does the
computations. It is our company's private information."
The only way for you to know exactly what the lenders are
charging you is to compute the monthly payments independently.
They are trying to make this task as difficult as possible for
you. They use complicated allocations, where they often change
the amounts that go to the interest and to the principal. Why?
Because they don't want you to know.
So you might be thinking that after a few years your monthly
payments have reduced your mortgage principal, when in reality
the principal changed little and all the money went to cover
interest payments and a lot of other funny charges, about which
you never have been told.
How can you get this information? It can be yours for the
asking. Of course you can start getting answers like: "It is not
in our computer. We need to order an additional report for that.
I don't have this information."
You can continue to deal with this people, if you wish. Just
know that they are lying. And if they are lying to you now, what
will prevent them to do the same later, when you are at their
mercy as their customer.
To learn more about investment advise and retirement planning
visit Money Management Forum at
MORE RESOURCES updated Thu. August / 18 / 2022
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