Mortgage brokers have no obligation to get their customers the best deal. Actually, mortgage brokers have an incentive to push customers toward a mortgage with an unnecessarily high rate. That’s because the bank’s payment to the mortgage broker, called a yield spread premium, compensates the broker for the spread between the lowest rate at which the lender will make the loan and the rate the borrower ends up with. In other words, the higher the rate, the more money the broker makes.
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For those inspired by television shows like Flip That House and Property Ladder, where regular people like you and I by a house to make a profit, there are warning signs. Not so much with the Property Ladder show, but more so with the others, please be aware that those people have investors looking for fast returns on a short term investment. Property ladder seems to focus on individuals with a budget, although they may have money or a construction loan.
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IKB Deutsche Industriebank AG, a German lender that invested in U.S. subprime mortgages, said its profit will be “significantly” lower than forecast as fallout from the deteriorating North American home-loan market spreads.
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A great article by Liz Weston tells home buyers what to look out for when buying a home. We recommend reading her entire article as it outlines the 8 biggests mistakes people make, such as:
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In an article from Scotland published on Sunday, July 29th, we see a great analysis of the mortgage crisis as it pertains to future loans, bank profits, and investment funds.
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