Make Money, Grow Rich And Attain Financial Freedom!

Written by Dian Herdiana on 10:01 AM

by Manohar Chimmani

"Wealth is thoughts, not things." -Robert G. Allen

"Money is not important."

It's one of the biggest myths known to man. And it is one of the core reasons why the majority of the people are not wealthy... why the majority of people not attaining financial freedom.

Tell this myth to the family who's starving right now or to the family who needs money for some serious medical help for a member of their family. They will tell you how important money is. We have conditioned from day one to believe that money is not important. Wanting money is wrong and un-ethical. And yet, the entire world is running after money.

Money is purely a way to appraise the amount of value you create for others. If you have a lot of money, it means you have created a lot of value for other people. If you don't have the amount of money you would like to have, that simply means that you just haven't yet found a way to generate the amount of value for others that you are capable of, or the value that you would like to.

Lack of money also leads to many social problems. If we look at the countries, cities and particular places that are very poor, we'll find usually more crime, more people taking advantage of weak, more diseases, more suffering, more deaths and no education at all.

Of course, money is not the only important thing in life, but without it you just can't survive. That is the basic fact.

Money is pretty darned important especially in this pure materialistic age. To support your self and your family, to buy food, water, shelter, clothing, to pay medical bills, to socialize... you need money. With money only you could be able to support and help people around you, even your loved ones. All we know that these are all most important things.

Also, if you feel that it's more important to contribute to others or to serve a social cause than to be rich, well guess what, again you need to earn money, grow rich and attain financial freedom. If you earn more money you can contribute more, serve more.

Then how come this myth created... money is not important? Simply ridiculous. Don't you think so?

About the Author

Manohar Chimmani lives in Hyderabad, the fifth largest city in India. Writing and Filmmaking are his passions. Online money-making is his hobby. He loves the creative outlet and freedom his hobbies and passions offer. Here's how he Makes Money and Makes Movies: http://www.growrichsmart.com

The Online Payday Loan

Written by Dian Herdiana on 7:28 AM

Online payday loans are useful to many people for a variety of reasons. Sometimes things come up unexpectedly and you don't have the cash available to deal with them. Getting a payday advance is a way to get money quickly to take care of your needs. Applying for the loan online can be a quick and efficient method of securing your loan.

Taking a payday loan online can be more convenient than visiting a traditional store. Many people work longer hours and cannot get in during the day. When you take a loan in person, you must go to the store to get the loan, and then go back two weeks later to repay it. This is a major time commitment that can be difficult. There is also the risk of carrying large amounts of cash back and forth to the bank. Online payday loans are much less time consuming.

Before you take an online payday loan, be sure to check several web sites to compare companies. Look at the annual interest rate and the fee per $100. There is usually a fee to wire the money to your account. These fees can vary widely and it is to your advantage to shop around before you commit. Also check any reviews that they may have. The Better Business Bureau is a great site to check to see what other consumers think of the company. Read all the fine print so that there will be no surprises later on.

Applying for an online payday loan is quick and painless. Once you determine which lender you want to use, simply log on to their site. Have your bank account number and routing number available. Most sites directly deposit your loan into your account. Payday advances are generally due in two weeks or on your next payday. The amount of the loan plus the finance charge is usually simply deducted from your bank account on the specified date.

There are some risks involved with an online payday loan. Whenever you transmit personal or financial information over the internet you have to be careful. Be sure that the website is secure. The way to do this is to be sure that it is an https as opposed to just http. Make sure that rates and terms are disclosed up front so that you don't get stuck with huge fees in the end. If you fail to have the money in your account to repay the loan, you will get charged insufficient funds fees from both the payday company and your bank.

Online payday loans are an efficient way to get quick cash in a pinch. They are convenient and speedy. Just be sure that you exercise caution and common sense when applying for your advance. As long as you follow some simple guidelines, online payday loans can be a viable way to relieve short term financial pressure.

Secured Personal Loan: Cost Effective Loans

Written by Dian Herdiana on 7:12 AM

If you are a homeowner looking for a loan, then a secured personal loan seems to be the right choice for you. The advantages of this loan are many. You get a comparatively low rate of interest. The terms and conditions are certainly more flexible. The repayment period is long and can range from anywhere around 5 to 25 years. All these benefits are possible because the borrower has already pledged collateral as security. In case the borrower is unable to pay back the loan, the lender can initiate legal action and even take over the collateral.

The threat of repossession makes secured personal loan a relatively risky proposition for the borrower. But in return they have to pay low annual percentage rates (APRs). Also, there are no limitations regarding their usage. It can be used for expanding your business, buying a new car, investing in new property, and even taking vacations. This kind of loans can generally be taken by homeowners, and therefore, also called homeowner loans.

The processing time of such loans is generally less. A person with bad credit history can also apply for a secured personal loan. Of course, the loan amount depends upon the equity of the property. But as a norm, you can avail up to 90% of your property equity. Secured personal loans are easily available. Several banks and financial companies offer secured personal loans with attractive terms and conditions. A detailed online search will guide you on the right track. Additionally, you also can go in for online loans.

About The Author: The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting Chance4finance as a finance specialist. For more information please visit: http://www.chance4finance.co.uk Article Source: http://EzineArticles.com/?expert=Jake_Nathan

Why to refinance second mortgage

Written by Dian Herdiana on 7:39 AM

One very effective way of saving money with your current loan is to choose a mortgage refinance that can balance or readjust your payments according to your needs. So why would you need a refinance second mortgage? The answer is that especially when the interest rates are increasing or, even in times of low interest rates, there just might not be any reason for thinking of a mortgage refinance. And even so there is still a way of saving money and even making some investments with a simple plan to refinance second mortgage.

The idea to refinance second mortgage implies that you are actually re-doing, re-considering, and even re-shaping your second mortgage. The expected result of refinance second mortgage is in the first place to save money by reducing the interest rate, and in the second place it aims to obtain additional money for further investments. With such adjustments, refinance second mortgage can save you up to hundreds of dollars per month, which will probably sum up to thousands of dollars throughout the whole payment term of the loan.

Usually this type of refinance second mortgage is a very common choice with those people who want to shift from a variable mortgage rate system to a fixed rate second mortgage which obviously implies fixed monthly payments at a lower current rate.

Refinance second mortgage is nevertheless a well chosen option if you need extra cash for other investments or a safety reserve for unexpected opportunities or even family emergencies, or, it can turn out to be of great help if you're considering any kind of projects of home improvement in order to increase the value of your property or maybe you may just want to secure your funds for debt consolidation. With all these second mortgage refinance can do a great job.

Two advantages that second mortgages hold are that they are tax-deductible and you don't have to pay annual fees with fixed rate second mortgages. So if you are barely coping with your financial problems, refinancing your second mortgage might be the solution. The best moment to benefit from the advantages of second mortgage refinance is to do it when the interest rates are still low, or at least lower than your current rate.

On the whole it will take about two-three weeks to get the refinance loan but the whole process can be either sped up or slowed down depending on different factors. The most important thing is to prepare the necessary documentation in due time, so that your lender will not slow down your loan process until you come with the complete documentation.

In conclusion when you are looking for refinancing solutions to get you cash out of your home you should carefully examine your options and also ask your lender about all the details and implications of refinancing second mortgage. For example if you decide to choose cash out refinance loan over a rate and term refinance the loan lender will add an extra charge to the rate. Still, home equity loans or second mortgage refinancing make an exception, as most lenders don't require any additional charges to the interest rates. So you might want to do some research in the refinance second mortgage matter when you want to finance cash for your home equity loan, rather than refinancing your first mortgage.

If you feel this helps, please drop by my website for additional information, such as how to refinance a second mortgage or additional resources on mortgage rates.

7 Surefire Ways To Repair Bad Credit

Written by Dian Herdiana on 7:19 AM

Do you have a poor credit rating? If so, you are one of tens of thousands of Americans with the same problem. In fact, it seems that this has become a national ‘disease.’ And just what do people need that have a disease? They need a cure.

Here are some sure-fire solutions to ' repair bad credit '. Keep in mind, like most ‘diseases,’ credit repair can take some time, but complete healing is possible.

The First Step

The first thing you need to do is find out what is being reported about you. This is easy and inexpensive. For under $10, you can get your credit report from one of the three main credit reporting companies: Equifax, Experian, or TransUnion. Keep in mind however, that if you have recently been denied credit, you can get a free report from the same credit bureau the lender used to reject you as long as you do so within 30 days.

What You Don’t Need

You don’t need a repair clinic. Why? There is no legal way to ‘repair’ your credit. Those that claim to know loopholes and shortcuts are merely out for your money. They may even get you into legal trouble by having you fudge the facts or creating a whole new file for you. Anything legal that a clinic can do, you can do just as easily and without the cost of ‘professional’ help.

Further Steps to Take

1. Stop using your credit cards immediately. Put them somewhere where they will not tempt you. You may consider keeping at least one card for emergency purposes. Additionally, with poor credit, you may find it more difficult to get a credit card in the future. If you keep at least one account open, then you won’t have to worry about applying.

2. Be Honest With Yourself. Taking a good hard look at your financial situation, particularly if it isn’t good, can be very difficult. Yet, to get out debt you have to fully understand what the situation is.

3. Find the Errors. Believe it or not, up to 40% of all credit reports have errors in them. If you find that your credit report shows something that is not true, you need to write to them with all the details. Be sure to use certified mail so that you can keep track of who you wrote to, when you wrote, and who received the mail on the credit bureau’s end. Then ask the credit bureau to send a corrected report to anyone who has requested a report on you in the last 6 months.

4. Find the Omissions. By law, you are allowed to add information to your report that you believe will help your rating. This might be additional information about a repayment of a loan, good credit you have with companies that do not report to the credit bureau, or salary increases.

5. You Must Have a Plan. Whether you determine to pay your bills down little at a time, take a second job, go to credit counseling, or file bankruptcy, you need to make a plan and stick to it. In order for your credit to be improved, you have to have a plan and then take action!

6. Talk to those that you owe. Creditors want their money. They do not want you to default (quit paying). In fact, most creditors will work with you to get a reduced payment schedule. If you can keep them from reporting you to the credit bureau, then it won’t hurt your credit. The catch here is this: be sure to stick to the new negotiated plan – they won’t renegotiate if you fail to comply.

7. The Best Cure is Time. Have you ever heard the saying ‘time heals all wounds’? It also heals your credit. After 7 years, most items will be dropped. This is good news if you are working to correct your credit. As each year passes, more and more bad items will drop off and more and more good items will be included. Eventually, the disease will be cured.

Follow these steps and you will find that your credit looks healthier and healthier each day. Eventually this path will lead you to full recovery. Good Luck!

Refinancing, Debt Consolidation Mortgage – Top 3 Benefits

Written by Dian Herdiana on 7:48 AM

By Ben Ehinger

Have you been thinking about refinancing your mortgage to consolidate some of your debts? A refinancing, debt consolidation mortgage, has become a very popular way to bundle all of a person’s payments and debts into one easy payment each month. This type of a loan has some great benefits

The top 3 benefits of refinancing your mortgage to consolidate your debts

Benefit #1 – You will only have one payment each month

It is generally easier for most people to make one payment each month instead of 5-8 different payments. It is easier to remember one due date and deal with one statement in the mail each month. When you refinance your mortgage to payoff other debts such as credit cards, auto loans, personal loan, old collection accounts, or any other debts, you are creating a system to only make one payment a month on all of these bills.

Benefit #2 – You can usually save thousands of dollars by refinancing

When you refinance your mortgage you will generally have a lower rate than the average credit card and personal loan. This will allow you to save money since; when you consolidate your debts into your mortgage you end up paying these debts at a lower interest rate. This can literally save you thousands of dollars on the back end of these debts.

Benefit #3 – You will no longer have these debts on your credit report

Refinancing to consolidate debts will completely eliminate the debts that you roll into your mortgage. This can drastically reduce your monthly payment and in the process clean up your credit report. Once you clean up your credit report by consolidating your debts your credit score will raise. Then, you can get a lower rate on new credit cards, loans, and even on your next refinance.

Now that you know the top 3 benefits to refinancing your home to consolidate your high interest debts, you have only one choice to make. Which lender has the right program for you? I recommend doing an online comparison quote to see what is out there, and don’t forget to shop around.

It's A Booming Time For Business

Written by Dian Herdiana on 7:06 AM

By Tim Knox

The first wave of Baby Boomers turned 60 this year and as many approach the traditional retirement age of 65 they are finding that (a) they are still vibrant and don' t want to stop working; and/or (b) their life expectancy has been extended and they will be dead broke long before they are dead and gone.

As a result Baby Boomers are not slowing down now that they're approaching what once would have been considered their "golden years." If you were a man you expected to retire at 65 and die at 75; and if you were smart you banked enough dough to see you comfortably through that stretch. We figured we'd get at least 10 good leisurely years before the grim reaper shows up without having to worry about money. Turns out, we were wrong.

Leave it to modern medicine and Mother Nature to throw a monkey wrench in our plans. People are living longer, which is one of those good news/bad news scenarios. It's good that you're living longer, but it stinks that you have no idea how you're going to finance all that extra life. Who wants to live forever on a diet of crackers and cat food? Certainly not me and I expect, not you. And do me a favor: if you see me thirty years from now passing out buggies at Wal-Mart, please, just kill me where I stand. You'll be doing me and all Wal-Mart shoppers a huge service.

Personally, I think Viagra is the reason men are now living longer. Let's be honest; if a man thinks there's still a chance of getting lucky when he's in his eighties he'll hold on for dear life. And women are living longer because they know old men couldn't survive without them. We'd never find our car keys or our pants or our reading glasses or our way home from the drug store.

Being your average, white male in good health, I can now expect to live into my eighties if I can avoid an unexpected heart attack, getting creamed by a runaway truck, or the wrath of my lovely wife (who I believe is actually killing me a little every day).

And by the time I get to eighty years old someone will have discovered a pill that extends my life into the hundred and ten range. Personally I don't think I want to live to be a hundred and ten. I'm crotchety enough now in my forties. Imagine what a pain in the backside I'll be fifty years from now.

All kidding aside, older Americans are finding that they have the time, energy, desire and, sometimes, the need to start their own business. I talked about the insurgence of older entrepreneurs in this column two years ago and as I predicted then, the trend toward elder entrepreneurship continues today.

• A report from Barclays Bank showed that older entrepreneurs are responsible for 50 percent more business start-ups than 10 years ago. This amounted to around 60,000 business start-ups in 2005 alone. The report further showed that only 27 percent run the business as the only source of household income, with 51 percent supplementing their pension.
• Other key findings showed that third age start-ups account for 15 percent of all new businesses, and third age entrepreneurs are three times more likely to be male than female.
• Americans over 60 are the fastest growing segment of Internet users and many are starting online businesses.

I talked to "Boomer Expert" John Howe, 63, of Dallas, TX, who has started an organization designed to assist Baby Boomers who want to learn more about entrepreneurship and making their older years more fulfilling and profitable. Howe publishes the weekly electronic magazine for Boomers found at Boomer-Ezine.com. I asked: How are boomer entrepreneurs different from younger entrepreneurs?

"Boomers have the benefit of the lessons that many bumps and scars of life taught them," Howe said. "They are more conservative than the younger group. Patience is a trait that one learns with age. When we are young, we tend to shoot from the hip a lot. A little age teaches you to take aim and fire.

"Boomers also have more money to invest in their venture than the younger group, but the fact that this money is from retirement savings makes a Boomer conservative. The Boomer will study the opportunity and do a lot more homework before jumping in."

Howe makes a good point. Boomers are more careful with their money because they have less time to rebuild their fortune than someone who goes belly up at 25. I asked Howe why he thought so many Boomers were starting businesses. Was it out of desperation and need or because they enjoy the challenge?

Howe responded, "I believe it is a mix of all of these. It also depends on the person. A major concern is that modern medicine will make us live longer and we will outlive our savings. When we started saving 30 years ago, many planned savings for living a shorter time that we are now projected to live."

And why are so many boomers now looking at entrepreneurship as a way to supplement their retirement income?

"Some, like myself, cannot think about not having a challenge to wake up to everyday," said Howe. "Sitting around without a definite direction is not my idea of retirement. I am also not doing this for free so it is also profit motivated. We Boomers made a lot of money over the course of our lives, but many lived for the moment and did not plan for retirement like they should have, or they suffered in the stock market downturn and lost a considerable amount of their savings."

In the end, Howe believes, the decision by Baby Boomers to start a business comes down to energy and economics. "If the desire and finances are there, there is no reason someone over 60 should not consider becoming an entrepreneur."

If you're a Booomer interested in starting your own business you can contact John Howe at Boomer-Ezine.com.

5 Super Wealth-Building Tips Pave the Way to Financial Freedom

Written by Dian Herdiana on 1:30 AM

There are so many things involved with building wealth that it would take much more than one article to explain it all. So, we've put together a simple five-step guide to help you get a great start in building wealth for a lifetime.

Step 1: Set Specific Goals

Goal setting is a task that can be easily put off - especially when you are extremely busy in day-to-day activities. However, goal setting is the first and one of the most important steps you'll take to achieve wealth. Set both short-term and long-term goals. Short-term goals may be daily, weekly and monthly goals. These should reveal where you would like to be financially by a certain time in the near future.

Long-term goals include the amount of wealth you would like to accumulate within a year, two years, or maybe even five or ten years. Both types of goals are necessary to build wealth. Without goals, you are wondering blindly with no care or thought of what's ahead. This pattern of life is sure to leave you empty-handed!

Step 2: Create a Business Plan

Every successful business from the past and today started with a plan. Your business plan should illustrate where you are now, where you plan to be in the future, and how you're going to get there. Write these few notes down on paper. Then, fill in the blanks to create a rough business plan. It's easier than you think.

*Your current income
*Business profits and expenses (if you already own a business)
*Business budget (or personal budget if working for someone else)
*Capital needed upfront to promote and operate business
*Plans to acquire the capital needed (source of capital)
*Spending plan (promotions, supplies, inventory, online expenses, etc.)
*Expectations (What results do you expect from your initial efforts?)

Creating a business plan is a necessary step to build wealth through your own business. Even if you don't own a business, you should write down a similar plan to reach your personal wealth goals.

Step 3: Avoid Harmful Debt

Debt is the one of the key reasons many people never accumulate wealth. But remember, there are two types of debt: harmful debt and necessary debt. Harmful debt is the debt you create for things you do not need such as excessive shopping, luxury items, expensive cars that you can't afford, etc. Necessary debt is a debt most people must have to live, such as a mortgage, car loan (affordable), medical, college, etc. These debts are a part of life for most families and will be for many, many years. However, even these types of debts should be kept well within your income limitations. If you can only afford a $250/month car loan, then shop around until you find one at this price. Don't give in to the temptations and pressures to buy the fancier, more expensive car with a $450/month payment. It's not worth the risk!

You may ask, "I thought these steps were for building wealth?"

As it happens, debt is the opposite of wealth. The more debt you have, the less wealth you will accumulate. You can't save money or invest money that belongs to someone else. If you earn $3,000 in income this month, but owe $2,000 in loans (before everyday living expenses), you can't possibly have extra money to save. You must either earn more or sell some items to pay off your debt. You should avoid this "debt trap" if you intend on building wealth for the future.

Another type of debt is one for your business. You may take out a small business loan to get things started or to promote your business. If you are uncertain about whether the business will bring profits, try to avoid business debt until you have tested it a while.

Step 4: Develop a Personal Plan

Above, you developed a business plan. Now it's time to create a personal plan. What tasks will you do daily to build wealth? Put yourself on a schedule and a strict budget. Work toward your goals daily by making a list of things to do and marking off each item on the list as you complete the tasks. In your budgeting, include a set amount of money you will put away in savings (savings account, IRA, stocks, bonds, etc.) If you plan to invest, be sure to diversify your investments. Choose only one or two high-risk investments and several "safer" investments such as mutual funds or bonds.

Step 5: Stay focused on the Goal, not the Circumstances

No matter what circumstances you find yourself in, keep your eyes on the wealth-building goal ahead. Even if sales are down in your business, don't stop dead in your tracks. Remember, businesses have ups and downs. If you remain steadfast toward your goal during the slow times, the busy times are bound to be much better than ever. Your income will grow and you will have the extra money needed to reach your wealth-building goals.

In a nutshell, building wealth does not happen over night with one get-rich-quick program. It happens with consistent labor toward the goals and tasks you have created. You can build wealth for your future if you do not waver from these basic truths that have worked for millions of others!

Article Source: http://ezine-articles-planet.com

Chris Robertson is an author of Majon International, one of the worlds MOST popular internet marketing companies. For tips/information, click here: wealth
Visit Majon's Business and Entrepreneurs directory.

Why Do Most People Fail to Meet Their Goals and Objectives?

Written by Dian Herdiana on 8:45 AM

By Roy Thomsitt

While there are probably no firm statistics on the subject, I think most of us would agree that the majority of people never achieve their goals and objectives. In fact, the same reasons for this failure can also be the reasons why many never really have any objectives in the first place.

To set objectives, someone needs to have ambitions, but not all people have any ambition at all. They may be either content, resigned, or are brainwashed into believing that they have a fixed role in a vast machine, from which there is no escape. Some, too, have probably never even thought about it. They have just done what they have done, and will do what they will do, as if they were an end product of a factory production line; products with no independent thought or purpose, just a spare part to be fixed to a larger product, which itself may be fixed to an even larger product.

The Odds Against Achieving Objectives

For those who do have any sort of ambition, objectives, and dreams, the odds can be stacked against them. There are many reasons for this:

1. The education systems of most Western countries do not train young people to think for themselves. Social pressures are therefore in favour of perpetuating the production line of subservient workers, the proverbial small cogs in large wheels. The politicians and their political parties who govern these countries have no reason to upset the status quo. The last thing politicians want is a generation of students who are powerful and independent in the use of their minds.

2. From the student days to the early days of a career, the vast majority just follow the trodden path of their parents and peers. If their parents and friends are not independent achievers, then the chances are they will not be either. To even set personal objectives at all, whether formally written down or loosely in their mind, would probably set them apart from the majority. But even then, it is like wading through mud to break free from the norm and achieve ambitious goals.

3. The best time to establish a pattern of setting goals and reaching them is while young. Young people, of course, are more easily distracted than their older counterparts. Whether it is through a volatile love life or an excess of parties and other social activities, achievement can easily take a back seat in their lives. Try to step outside of that norm, and they may well feel peer pressure forcing them to conform. The fact is, most people, of any age, cannot deal with being different from everyone else. To set ambitious objectives and achieve them needs a firm degree of independence, both in action and thought.

4. To set and achieve personal goals requires a lot of motivation, and that is not something that is in plentiful supply. For many in the material West, motivation equates to money, but money itself is not a competent motivator. Why go to the trouble of setting goals and working flat out to achieve success and get that money? That is something of a scenic route; there is, after all, a direct line to money in the West, in the UK and US in particular, and that is the Credit Line. The credit disease is itself can demotivate when it comes to actually doing something that will earn you money.

5. By and large, people are lazy, and cannot be motivated to work hard for themselves and set themselves apart. Once in a job or career, it is so easy to slip into an auto pilot life, pivoted around a large mortgage, cars you cannot really afford, a daily grind of commuting to a job where you have no independence and can be fired at the drop of a hat. But, it's your life and you keep it that way until forced to do otherwise.

6. Achievement in most fields involves set backs along the way. Most people are impatient and unrealistic, and if success is not a smooth path or instant, they soon give up and retreat to their safe, humdrum, non independent existence. They may never then wake from their slumber, until one day they wake up to find themselves near to retirement, made redundant, heavily in debt, and with no savings or investment. That is a common path for those not determined to achieve true independence, both financial and in thought.

Achieving worthwhile goals, which you really desire and will bring you long term financial freedom and wealth, requires vision, determination, an ability to bounce back from set backs, persistence and a lot of self belief and confidence. It also means ignoring the doubters, who one day look upon you with admiration and envy, but for now are making you look small with their flash credit driven car and 110% mortgaged house which they will never really own.

For those who can overcome all those obstacles to achievement, life can eventually become very sweet indeed, and the negative influences, the doubters, will fade into the distant past.

Mortgage Refinancing – A Warning About Refinancing With a Bank

Written by Dian Herdiana on 8:58 AM

If you are considering mortgage refinancing with your bank, you should read the following discussion first. Banks fall into a special category of mortgage lenders and routinely charge Service Release Premium (SRP) for their loans. What is SRP and why should you avoid banks altogether for your next mortgage loan? The answer will surprise you.

Banks and Broker-Banks are a unique type of mortgage originator as they fund their mortgage loans with their own money; Broker-Banks are simply banks pretending to be mortgage brokers. Everyone else in the marketplace (mortgage companies & brokers) is a retail vendor that sells mortgage products for wholesale lenders. Because banks fund their loans with the bank’s money, many people mistakenly think taking out a mortgage from the bank or credit union is going to be cheaper than taking out a retail mortgage loan.

The ugly truth about banks comes from the fact that they are exempt from the Real Estate Settlement Procedures Act (RESPA); legislation that protects homeowners from abusive lending practices by requiring mortgage lenders to disclose all fees and markup associated with their loans. When RESPA was being the drafted the banking lobby campaigned feverishly to be excluded from any disclosure legislation. Millions of dollars changed hands and when RESPA became law, your bank was exempt. This means the bank can literally charge you whatever they like and no one is the wiser.

So what is Service Release Premium?

Bank mortgage loans are often called “correspondent loans” because after the banker completes your mortgage that bank will immediately turn around and sell it on the secondary market. Banks earn a premium on the secondary market by charging Service Release Premium, and here’s how it works. Suppose prevailing mortgage interest rates are 6.00%. You have good credit and meet every requirement to qualify for a 6.00% interest rate on the wholesale market. Your banker knows this, but charges you 6.50%. The markup from 6.0% - 6.5% is Service Release Premium. Banks do this because they will receive an additional two points, or 2% of the loan balance, when the mortgage is sold on the secondary market. Because banks are exempt to all RESPA laws protecting you from this fleecing, you will never know it happened.

Every bank does this and because of the loophole in RESPA legislation and no bank will ever disclose how much they have inflated your mortgage interest rate. Another problem with banks is that your banker will be much less likely to negotiate for terms and interest rates because of the loophole. Banks exploit the loopholes in RESPA to make their loans seem more affordable with the fees and closing costs; however, they hit you with undisclosed SRP markup on your interest rate. Your bank will always quote you the highest interest rate they think you will go for.

The bottom line is that your bank will not be less expensive than other options; your bank will always overcharge you for the mortgage loan. You can learn more about finding the best mortgage loan without overpaying by registering for a free mortgage guidebook.