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Radical Transparency for the Mortgage and Real Estate Industries
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Risk Based Pricing How Mortgage Rates are Determined. Credit Scores and History

Started by JeffX · 12 months ago

Risk Based Pricing   How Mortgage Rates are Determined.  Credit Scores and History

The following material isn’t all that easy to follow, there are many moving parts.  It’s the equivalent of college level mortgage economics, I’ll try to be a succinct as possible.

First, IT IS VITAL that you understand exactly what your ... Continue reading »

4 comments

  • California Mortgage Home Loan

    11 months ago

    While RBP seems complicated, it's the best thing that could have come out of the current mortgage crisis.
    reply
  • Rob Hahn

    11 months ago

    Jeff...

    This should be perma-pinned somewhere on your site and various other sites.

    In fact, this should be required reading for all graduating high school students.

    I truly believe that if you took this whole series and turned it into an easy-to-read, easy-to-understand set of videos or books, it would be a valuable public service.

    -rsh
    reply
  • AustinSurferDude

    10 months ago

    I agree with one of the previous comments on educating the public. We need much greater transparency in the mortgage and consumer credit rating markets. Without such, we will continue to see huge agency costs that tend to penalize the less educated consumers which is highly correlated with the lower income borrowers, who, arguably, do not need these additional agency costs or penalties. I think a higher degree of transparency would definitely have helped in the recent credit crisis, however I would also argue consumers will buy whatever products are presented with little regard to longer term consequences (such as the case with the terrible ARM products put out there)...as 80% of consumers cannot rationalize well time value of money or future costs at the point of consideration and decision.

    If Congress didn't suck so badly, they could impose better transparency guidelines (note that I'm not saying regulate, but rather ensure transparency, as I believe the market should self-regulate and allow broad risk profiles for investors). I would argue the majority of consumers cannot clearly articulate between interest rate and effective APR that is shown on every mortgage product.
    reply
  • Surviving A Recession

    4 months ago

    Wow! That was by far one of the most informative articles i have ever read on how mortgage rates are set. This is great stuff to know when you are negotiating a mortgage. I am assuming that this type of information is leveraged by mortgage brokers to get paid? Knowing this would enable you to negotiate fees the broker wants to charge. Fantastic information.
    reply

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