The U.S. Government : Your Mortgage Rate “Middle Man”

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Loan-Level Pricing Adjustment Upcharges

Today's blog content is posted at HSH.com. HSH is a regular gig for me; an opportunity to write for a second, mortgage-hungry audience. It's a wider reach for me, too.

The Government Is Marking Up Your Mortgage Rates

This week's piece is titled "Your mortgage rate is treated like auto insurance". It talks about how conforming mortgages -- from Blacksburg, Virginia to Greenville, South Carolina -- are subject to "risk-based pricing" called Loan-Level Pricing Adjustments.

LLPAs work similar to how auto insurance works.

An excerpt:

In the world of auto insurance, "riskier" car owners pay higher rates for insurance. The sports car pays more than the minivan; the street-parker pays more than the garage-parker; and the low deductible pays more than the high deductible. Instinctively, this makes sense.

The same concept applies in the world of mortgages. The more risk that you -- as an individual -- represent to Fannie Mae or Freddie Mac, the more you will pay for your mortgage.

Read the full article on the HSH website.

See How Much YOUR Loan Is Marked Up

The official Loan-Level Pricing Adjustment guidelines are complicated. So, I built a calculator. You can access it here. Just punch in your loan traits and see your markup.

Markups can be as high as 3.000 percent against your loan size.

Not all loan programs are sold through Fannie Mae or Freddie Mac, thankfully, so there are ways to avoid the large LLPA fees. I can talk you through it by phone or email anytime. Call me at 513-443-2020, or.

You can also cut to the chase, if you prefer. Click here to use my online rate quote generator.

About the Author

Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.

You can also find Dan on Twitter and Google+.