I was a branch manager for Centex Home Equity. I am here to tell you that they have a phrase for new susceptable borrowers. It's called "Clubbing a baby seal." This company scours the internet through various internet marketing companies (i.E. Loan Web, Lower My Bills.com, and Lending Tree) looking for borrowers uneducated in the mortgage lending industry. They use terms like accelerated interest, fresh start, and tax shelter to lure potiential borrowers that actually believe that they have no other option.
Most direct lenders and brokers aim to make 3% on a loan through points and SRP (service revenue premium.) This means on a $300,000 loan, we earn $9,000.00. Typically 50% of that fee goes for overhead and the rest is commission to your mortgage banker.
Centex has a target revenue of 8.5%. This means on a 00,000 loan, their target profit is $27,500.00. This is an unwarranted profit considering they are simply refinancing your home. Consider the fact that you might actually be giving up nearly 10% of your equity! What's more is that your loan officer only makes typicaly 1% ($3,000) of your loan volume ($300,000) in commission - for the example I used earlier. So not only are you getting ripped off, but your loan officer gets robbed as well.
If you are actually naive enough to consider using Centex Home Equity, follow this advice:
1. DO NOT PAY FOR AN APPRAISAL.
If they want your business badly enough, they will fund your appraisal for you.
2. Make sure you receive a Good Faith Estimate. Take your GFE to another mortgage professional and see if they can do any better. I promise you, you will be surprised by the results. Fact is, as a mortgage banker, I can get a loan approved through Centex Home Equity for 1/3rd the cost if you go through them directly!!! Don't believe me... Try it.
3. Just don't do this to yourself. You are going to get ripped off. No matter how bad you think your credit is... An experienced mortgage professional will know how to handle your business and get you qualified for a REASONABLE fee.
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