Mortgage Refinance Guide

If you’re refinancing your home loan in the State of California and are looking for a wholesale mortgage lender, there are several things you need to know about wholesale interest rates. Most homeowners do not understand how mortgage rates are quoted and overpay thousands of dollars every time they take out a home loan. Here are several tips to help you find a California wholesale lender without paying markup and unnecessary junk fees.

How Are Mortgage Rates Quoted?

In order to accurately quote a mortgage rate the lender needs to have sixteen factors of financial information from you. If you receive rate quotes without providing detailed financial information I can tell you whoever gave you the quote has no intention of honoring it. This is a common tactic of shady mortgage brokers practicing bait-and-switch scams. They’ll promise you the moon and when the deal falls through they switch you to a more expensive mortgage loan that brings them the largest commission.

Once you provide your financial details and get a quote you should know that you have a “retail” mortgage rate quote. Mortgage companies and brokers that deal with the public quote rates that include commission based markup. You might think that going directly to a wholesale lender will cut out the middleman and get you wholesale interest rates; however, these wholesale lenders all have retail divisions that deal with the public and only offer their best rates to mortgage companies and brokers.

What is Commission Based Markup?

When you take out a home loan from a mortgage broker you will pay an origination fee for the broker’s services. This fee ranges from less than one percent to as much as three or four percent. (One percent is a reasonable amount to pay the broker…any more and you’re being taken advantage of) The problem with commission based markup is that you’re already paying for the broker’s work. What your mortgage broker isn’t going to tell you (and frequently becomes angry or defensive if you question him or her about it) is that they are marking up your interest rate to get a kickback from the lender.

See wholesale lenders know that mortgages that have above market interest rates bring them huge profits when they sell your home loan to investors, so they reward mortgage companies and brokers for closing loans with above market rates. The higher your mortgage rate the higher the reward for the person closing your home loan. What does this mean for you? A higher mortgage rate means higher monthly payments and money that you’re throwing away on unnecessary finance charges. You’re already paying the broker for their services; on top of your fee they’re helping themselves to your money in the form of a higher mortgage rate.

This commission based markup of your mortgage rate is called Yield Spread Premium and will easily double, often triple the compensation your mortgage broker receives for your loan. Sounds sleazy right? Here’s an example to show you just how sleazy Yield Spread Premium is. Suppose you are refinancing a $300,000 home loan at 6.5% and the mortgage broker charges you 1.5% for loan origination. That means you have to come up with $4,500 at closing to pay the mortgage broker. What you’re broker isn’t telling you is that you actually qualified for 6.0% from the lender and that they’ve marked it up because the lender pays them 1% of your loan amount for every .25% you overpay.

In this example the broker receives an additional 2% or $6,000 on top of the $4,500 you’re already paying for their services. That’s $10,500 for a few hours work and you get stuck paying an above market interest rate.

Finding California Wholesale Lenders

The good news for you today if you’re refinancing in California or any other State for that matter, is that there are ways to refinance your home without paying Yield Spread Premium. (Or lender junk fees) You can find honest mortgage brokers willing to work for reasonable origination fees if you know how to shop for a mortgage loan.

You can learn more about comparison shopping for California Wholesale Lenders when refinancing and avoiding unnecessary garbage fees by registering for a free mortgage video tutorial. Register today; the videos are free and can save you thousands of dollars on your next mortgage loan.

If you’re looking for an online savings account, ING Direct’s Orange Savings account is the Cadillac of online accounts. Most banks are offering some type of online savings account today; however, very few offer the same features and the Orange account. Here are my experiences with ING and several tips to help you decide if the Orange online savings account is right for you.

Saving money can be extremely difficult for many people; according to financial advisor David Ramsey nearly 78% of all Americans live paycheck to paycheck. If this describes your finances you could be just one emergency away from a financial meltdown. The good news is that saving money is easier than you think. Tools like ING’s Orange online savings account make it very easy to stash money away from every paycheck that you’ll never miss.

ING was the first to offer the online savings account in 2000 allowing people who have outgrown their piggy banks to squirrel money away in a very liquid online savings account that earns a better return than those offered by banks or credit unions. One of the best features of ING’s Orange online savings account is the ease of access to your money; typically, your cash can be accessed in just a few business days. The best thing about the Orange online savings account is that there are no fees or minimum balances. There are also no tricks buried in the fine print that you’d find at a bank like Wells Fargo.

How can there be no fees or minimum balances? What’s the catch? There is no catch for you, but just because ING isn’t charging a fee for their online savings account don’t think they’re not making money from it. ING has almost ten times the amount of deposited funds than their nearest competitor.

Getting Started With an Online Savings Account

While I haven’t opened many accounts online, ING’s online savings account is the easiest account that I’ve ever opened. I do have many other accounts but I keep my ING online savings account just because it’s so easy to use and doesn’t cost me anything. Opening your Orange online savings account is easy; it takes about 5 minutes to complete the application. After you complete the application ING will make several test deposits to you checking account and once you confirm the amounts of those deposits, you’re ready to go.

Having referred a number of friends and family members to the Orange online savings account I can tell you that no one I know has ever had a problem with them. That includes cashing money out of the account which is handled by ACH direct deposit to your checking account. You can start your ING Orange online savings account by clicking here:

Once your account is active you’ll have access to all of the nifty features that come with your Orange online savings account.

Cool Interface The user interface is slick and easy to navigate. The buttons are clear and intuitive. Everything you need to do is just…easy.

Sub-Accounts This feature allows you to use multiple accounts, each with it’s own unique account number. This allows you to designate an account for a specific goal, like saving up for vacation.

Refer a Friend Once you’re an ING customer you can refer your friends and put up to $250 in your pocket. ING pays a finder fee of $10 for up to 25 of your friends, coworkers, and family members.

Interest Paid at a Glance Your ING control panel shows how much interest was paid to your account this month. You can see exactly how much your money has earned.

Other cool features include automatic deposits from your checking account, the ability to link up to three external accounts, and downloading your transactions automatically into MS Money or Quicken. ING also allows you to set up accounts for children. If you’ve been looking for a way to stop living pay check to pay check or want to start saving for a rainy day or that upcoming vacation, ING’s Orange online savings account could be your answer.

If you are considering refinancing your California home loan, there are a number of costly pitfalls you need to be aware of. The high cost of homes in California is bad enough without every Tom, Dick, and Harry with a mortgage license helping themselves to your money; however, that’s exactly how mortgage loans work. Yield Spread Premium is the retail markup of your California mortgage rate and will result in your paying thousands of dollars in unnecessary finance charges.

Your mortgage representative marks up the interest rate you qualified when refinancing your California mortgage because the wholesale lender pays them a bonus for overcharging you. That’s right, for every quarter point you unknowingly agree to overpay, the loan representative receives a bonus of one percent of your loan amount. Factor in the high cost of real estate and Yield Spread Premium is the single largest scandal facing the California homeowner; however, this unnecessary markup of your mortgage interest rate is perfectly legal.

How can you avoid paying Yield Spread Premium when refinancing your California home loan? It’s simpler than you think; once you understand how mortgage companies and brokers make their money you can negotiate to pay less. Start by telling your mortgage broker that you understand Yield Spread Premium and will not tolerate it with your California home loan. Tell them that you will pay a reasonable origination fee for their services and all necessary third party settlement charges, but will not tolerate any form of lender paid compensation for a higher mortgage rate.

You can learn more about refinancing your California home loan while avoiding costly mistakes such as computerized loan origination fees with our free mortgage tutorial.