Mortgage Refinance Video Tutorial

Did you know refinancing your mortgage is just like car buying? Most homeowners don’t know that mortgages are retail products like cars; suggested retail value is not what you want to pay when buying a car or refinancing your mortgage. Here are several tips to help you pay less when refinancing your mortgage with a wholesale interest rate.

Do you know what makes mortgage loans “retail?” Retail mortgage loans have interest rates that have been marked up by the loan originator for a commission. Your loan originator is the person responsible for putting your loan together; this person could be a mortgage broker or a representative at your local mortgage company. Loan originators mark up interest rates because the wholesale lender pays them a bonus for overcharging you. When you close on a new mortgage with an above market interest rate the wholesale lender pays a bonus of one percent for every quarter percent you overpay.

The difference between the interest rate your wholesale lender approves you and the mortgage rate you close with is called Yield Spread Premium. According to the Secretary of Housing and Urban Development Yield Spread Premium will cost homeowners sixteen billion dollars in unnecessary finance charges this year alone. The good news is that you can refinance your mortgage with a wholesale interest rate and avoid paying Yield Spread Premium altogether.

Homeowners who learn to recognize Yield Spread Premium on the Good Faith Estimate and HUD-1 statement can negotiate to find loan originators that won’t charge this unnecessary markup.

You’re already paying origination fees for the broker’s part in arranging your loan; if you agree to Yield Spread Premium you’re paying this person double, even triple they do. You can learn more about refinancing your mortgage without paying too much with our free mortgage toolkit.

If you are a Colorado home owner considering a new mortgage loan, there are several steps you can take to avoid paying too much when refinancing. Comparison shopping mortgage offers will only get you so far unless you know how to negotiate for wholesale mortgage rates. Here are several tips to help you refinance your Colorado home mortgage with the lowest rate possible for your situation.

Many homeowners start their search for a new mortgage by typing Colorado Home Mortgage Refinance Loan into a search engine. This search would return a number of websites promising mortgage quotes with low interest rates. The problem with these “Colorado Home Mortgage Refinance Loan” quotes is that they include retail mortgage rates that have markup intended to give the loan originator a fat commission check.

So what makes a mortgage loan “retail?” Retail mortgages include markup known as Yield Spread Premium. This markup is the difference between the wholesale interest rate the lender approved your loan and the mortgage rate you closed with. Mortgage companies and brokers mark up interest rates because wholesale lenders pay them a bonus for closing mortgage loans with above market interest rates. For every quarter percent you agree to overpay your loan originator pockets one percent of your mortgage amount.

Here’s an example of how retail mortgage interest rates work. Suppose you refinance your Colorado home mortgage for $250,000 for 30 years at 6.75% interest rate. Your mortgage broker charges you an origination fee of one percent and tells you what a fabulous deal you’re getting. (Sound familiar?) What your broker isn’t telling you is that the wholesale lender approved you for a 6.25% mortgage rate and they’ve marked it up to 6.75% for a commission.

In the previous example the mortgage broker pockets your origination fee of $2,500 plus $5,000 from the lender for a total of $7,500. You’re stuck with an above market interest rate that you didn’t have to pay. Don’t let this scenario happen with your Colorado home mortgage refinance loan; by learning how to recognize Yield Spread Premium you will keep the wholesale mortgage rate your lender approves you. You can learn more about refinancing without overpaying by requesting our free mortgagee toolkit using the link at the top of this page.

People frequently find the site by typing the words “Best Refinance Home Mortgage Loan Rate” into a search engine. They’re probably searching for a rate quote; however, how many homeowners actually know what they’re looking at when they get one?

Best Refinance Home Mortgage Loan Rate will get you a mortgage with Yield Spread Premium.

Most homeowners don’t know the rate quotes they receive are actually retail interest rates. They’ve been approved for a wholesale rate but their loan originator marks that rate up to get a commission from the lender. The difference between the wholesale rate you’re approved and the above market interest rate you close is called Yield Spread Premium.

Loan originators mark up mortgage rates because they can double, even triple their commission by adding Yield Spread Premium. Most mortgage brokers and loan representatives will never tell you they’re doing this; if you don’t catch the cleverly disguised markup on your HUD-1 statement you’ll never know what your could have been. Here’s an example to illustrate how the “best refinance home mortgage loan rate” quotes can hurt you.

Suppose you’ve decided to refinance your existing $250,000 mortgage loan for 30 years at 6.75 percent. Your mortgage company charges you a one percent fee for the loan origination. One percent is a perfectly reasonable fee for a mortgage broker’s services; however, most brokers will tell you otherwise. What your mortgage broker isn’t telling you about this transaction is that you qualified for a 6.0% and they’ve marked up your rate to 6.75% for their commission. The wholesale lender pays your broker a bonus of 1.0% for every .25% you agree to overpay. In this example the broker receives a whopping $10,000 commission for overcharging you.

If you’ve ever wondered how your mortgage broker is making his Hummer payment, now you know. Your broker walks away with a ridiculous commission and you get stuck paying an above market mortgage rate. The good news is that you can stop your loan originator from lining their pockets at your expense. Homeowners who learn to recognize Yield Spread Premium can negotiate with potential mortgage brokers to avoid paying this ridiculous markup. This is much easier than you think and I’ve prepared a simple video to show exactly how to do it. For immediate access to my mortgage refinancing toolkit simply register using the link provided at the top of this page.

The majority of confusion homeowners have when refinancing their mortgages comes from closing costs. Many homeowners simply don’t know which closing costs are legitimate and what reasonable third party charges are. When refinancing your mortgage there are basically three ways to pay your closing costs.

The most common and most expensive method for paying your mortgage closing costs is to roll them into your loan balance. This method not only raises your principle balance but the amount you pay for financing charges over the entire duration of your loan. Another common and misleading ploy lenders use are the so called “no fee” mortgage loans. These are popular among lenders like Bank of America who brag about their “no closing cost” or “flat fee” mortgage loans.

The problem with no fee mortgage loans is that are truly no free lunches when it comes to loans. Mortgage lenders never waive their fees, the simply offset them from another source. This offset almost always comes in the form of a higher mortgage rate. Why pay a higher interest rate for the entire duration of your loan when simply paying these costs will save you ten fold over the lifetime of your loan? Think of your closing costs as an investment that will bring you a return in the form of lower finance charges for the entire duration of your mortgage.

When you’re paying closing costs out of your pocket it’s important to make sure the person originating your loan doesn’t markup up your interest rate for their commission. Many brokers allow homeowners to use Yield Spread Premium to pay their closing costs. Yield Spread Premium is the “retail” markup of your interest rate for a commission from the wholesale lender. Rather than pocket this cash a good mortgage broker will let you use it to pay your settlement charges.

Dishonest mortgage brokers keep this money even when the closing costs are coming out of your own pocket, often without telling you. How can you avoid paying Yield Spread Premium when refinancing your mortgage? Homeowners who simply learn to recognize this unnecessary can avoid paying it. You can learn more about refinancing your mortgage without paying too much with our free mortgage toolkit.

Refinancing your home loan with a mortgage broker can help you find loan offers you wouldn’t find comparison shopping on your own. One big problem with mortgage brokers is that they are paid by commission and the loan that nets them biggest commission is probably the wrong loan for your situation.

Another problem with mortgage brokers are the sneaky and deceptive tricks they use to get their commission. Because you’re already paying a perfectly reasonable origination fee for their services, any additional commission is not only unnecessary, but is simply taking advantage of people. Here are several tips to help you avoid mortgage broker tricks when refinancing your mortgage.

The biggest trick your mortgage broker is likely to pull is what’s known as Yield Spread Premium. This is the unnecessary markup of your mortgage interest rate to get a commission from the lender. Never mind that you’re already paying origination fees; for every .25% the broker inflates your mortgage rate the wholesale lender pays them an additional 1% of your loan amount. Mortgage brokers are required by the Real Estate Settlement Procedures Act to disclose this markup; however, they have clever ways of disguising it on the HUD-1.

Here’s an example of a brokered transaction including Yield Spread Premium. Suppose you are refinancing your mortgage for $315,000. Your mortgage broker tells you they’ve got a great deal for you at 7.0% for 30 years. The broker charges you one percent for the origination fee which is a reasonable $3,150 to pay. What your mortgage broker isn’t telling you is that the wholesale mortgage lender approved you for a 6.5% interest rate and they’ve marked it up because the lender pays them a bonus of $6,300 for overcharging you.

Mortgage lenders pay a bonus for loans with above market interest rates because the lender makes the majority of their profit selling loans to investors on the secondary mortgage market. Loans with above market mortgage rates bring a premium profit for the lender. In the previous example your mortgage broker banked $9,450 and you get stuck paying an above market interest rate.

How Can You Avoid Mortgage Broker Tricks?

You can avoid paying Yield Spread Premium when refinancing by learning how to recognize the markup and negotiating with potential mortgage brokers. Start by telling your broker that you understand how this markup works and will not accept a loan that includes any lender paid compensation. You can learn more mortgage broker tricks to avoid when refinancing with our free mortgage toolkit.