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Texas Refinance Mortgage
July 6th, 2007If you are a homeowner in the State of Texas considering a new mortgage loan, there are several things you need to know to avoid paying too much. Here are several tips to find the perfect lender for your Texas refinance mortgage.
The first thing you need to know about your Texas refinance mortgage is that comparison shopping will only get you a retail mortgage rate. In order to get a wholesale mortgage rate you need to negotiate with potential mortgage brokers for a loan that does not include Yield Spread Premium. If you’ve never heard of Yield Spread Premium it’s the markup the broker adds for a commission on your loan.
Yield Spread Premium 101
When you take out your new Texas Refinance Mortgage the person arranging your new loan will charge you an origination fee; one percent of your loan amount is a reasonable amount to pay for your mortgage broker’s work. Unfortunately most mortgage brokers think the work they do is worth a lot more of your money and this is where Yield Spread Premium comes in.
So what is the markup known as Yield Spread Premium? Here’s an example of how it works. Suppose you’re taking out a Texas refinance mortgage for $350,000; your mortgage broker tells you that you qualify for a 7.0% interest rate and charges you $3,500 for the origination fee. So far this loan seems like a good deal; however, what your mortgage broker isn’t telling you is that you actually qualified for a 6.5% interest rate and they marked it up for a bonus of $7,000 from the lender.
Is Your Mortgage Broker’s Work Worth $10,500?
How much time do you think your mortgage spends working on your loan? One hour, two hours, maybe three? Is their work really worth ten grand? Probably not, however, the current system allows them to pocket this much at your expense. You get a Texas refinance mortgage with an above market interest rate and your mortgage broker gets to make their boat payments.
How Not to Overpay When Refinancing
The good news for homeowners in Texas is that you don’t have to pay this ridiculous markup when refinancing. Homeowners who learn to recognize Yield Spread Premium can negotiate when shopping for their Texas refinance mortgage to avoid paying the markup. You can learn strategies for avoiding Yield Spread Premium and other common mistakes with our free mortgage toolkit.
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I have been, what I consider to be burne, by Chase Manhattan Mort. twice. After buying my home is 1999, I refinanced to an ARM in 2003. That ARM was a set monthly note of around 1033.00 per month. Due to their miscalculations on the escrow, that monthly then jumped to $1,700.00 per month. I had to have the escrow shortfall I was paying spread out over 12 months just to afford it. All based on miscalculations and errors by Chase. I refinanced again in 2008 to get out of the ARM. The monthly note was set at 1011.00 per month. After three or four months, Chase miscalculated the escrow again and my note jumped to over #1,700 per month. I was able to get it down to $1,466.33 per month and then it jumped again to the present $1,537.00 per month. These miscalculations are gouging me and I do not understand them. What is the point in refinancing if Chase is going to miscalculate the escrow, as they say, and bring my monthly back to an unafordable level? These errors should not cost me, especially during these rough economic times. Is this some type of clever financial scheme that is hard to prove, whereby companies make more profit by increasing refinance monthly notes based upon purposeful flawed escrow analysis? I believe chase needs to be investigated for this. I’m sure I am not the only person in this situation. And what can I do? Do I need to just cancel my escrow and pay it all each year by myself or are there other protections I could have chosen that are built into the loan that Chase may not have mentioned or Texas offers?