Reply #11: The thing to watch in the APR. [View All]

[Snarkoleptic]

The annual percentage rate shows the 'true cost' of the loan.
When you see a major variance between the 'rate' and the APR, that means you're being charged a lot of fees.
(although many of the 'cost of doing business' fees aren't counted in the APR)
A broker earns yield spread premium whereas a banker (like Ditech) earns service release premium.
The difference is that the broker is required to disclose this additional compenation whereas the banker is not required to disclose this source of income (that the federal government working for you). Personally, I'd like to get a complete picture of all compensation (you won't get that from Ditech).
Any good broker will beat Ditech, Lendingtree, the local bank, local credit union, etc by around .375% (or around $60/month on a $250K loan).

One final point, most brokers will offer you a 'no closing cost' option where they pay your costs from their yield spread premium.
This is an effective way of lowering the out of pocket costs.

I've been in the industry for over 20-years, let me know if you have any other questions.