If you are in the process of refinancing your home loan with your bank, you will overpay for your new loan no matter where you bank. There are pros and cons with any type of mortgage lender and if you aren’t careful you will pay too much. Here are several reasons why you should never take out a mortgage loan from your bank.

Banks make the majority of their profit by selling your home loan to the secondary mortgage market. Banks are not required to disclose their mark up on your mortgage loan. The mortgage you take out from the bank is funded entirely by the bank and pooled together with their other loans. Once you close on the mortgage the bank will turn around and sell your loan to secondary mortgage market collecting their profit. No one but the bank knows how much they are profiting by selling your loan; the more they overcharge you for the loan, the more the bank will profit.

Pros of Bank Funded Mortgages

• Bank Loans are Convenient
• Bankers are Less Likely to Use Pressure Sales Tactics
• You May Already Have a Relationship with Your Banker

Cons of Bank Funded Mortgages

• Limited Number of Loan Products to Choose From
• No Room for Negotiation on Your Interest Rate
• Interest Rates Are Always Higher
• Banks Are Not Willing to Negotiate Lender Fees and Closing Costs
• Banks are Exempt from Disclosure Rules Provided by the RESPA Act

As you can see the cons of bank funded mortgage loans clearly outweigh and advantages. If you are not familiar with RESPA, it is the Real Estate Settlement Procedures Act that protects borrowers in the United Sates by setting guidelines for disclosure. Banks are exempt from the disclosure rules required of other mortgage lenders. Do you really trust your banker not to take advantage of you?

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