Want the lowest mortgage refi rates for your next home loan but don’t know how to go about it? Worried that hidden markup and junk fees could turn getting those low mortgage refi rates into a horrific mistake? Here are several of my best tips for avoiding hidden markup of your mortgage refi rates and junk fees that result in overpaying thousands of dollars.
Lowest Mortgage Refi Rates
Everyone wants the lowest mortgage refi rates for their home loans; however, most people don’t understand is the quasi-retail nature of mortgage refi rates. With the exception of bank originated home loans (there are hidden reasons for avoiding those completely), home loans originate with wholesale mortgage lenders. Everyone knows buying wholesale can save you a boatload of cash when it comes to things like electronics and home appliances, well the same is true when it comes to mortgage refi rates.
Wholesale Mortgage Rates
Home loans may originate with wholesale lenders but like most retail products they’re resold by a middleman with markup for a profit. Cut out the middleman and you’ve got yourself wholesale mortgage refi rates right? Not exactly. The problem with getting wholesale mortage refi rates is that even if you did contact a wholesale lender directly most have retail divisions that have the same retail markup you get everywhere else.
So how can you get wholesale mortgage refi rates? Most brokers will tell you that you can’t simply because they’re protecting the commission they get from marking up your home loan. The secret to getting wholesale mortgage refi rates is finding the right person to arrange your home loan. I’m not talking about having a cousin who is a mortgage broker doing you a favor (if you’ve got a good mortgage broker in the family you probably wouldn’t be reading this) but finding an honest, local broker to arrange your next home loan for a flat loan origination fee without making up your mortgage refi rates.
Hidden Home Loan Markup
What is this hidden markup of your mortgage refi rates that I’m talking about? In a nutshell, any broker that locks and closes your home loan with higher than necessary mortgage refi rates gets a commission known as Yield Spread Premium (YSP). Think of YSP as a kickback to the broker for overcharging you. This kickback is not only an incentive to overcharge you, but that higher than necessary mortgage refi rate drives up your payments meaning you’ll have less cash in your pocket. Don’t get me wrong, I’m not saying brokers don’t deserve to get paid for their work…that’s what the loan origination fee is for. Paying your broker a flat loan origination fee of one percent of your home loan amount is more than ample compensation for the work they do arranging your home loan. Brokers and other mortgage companies like Lending Tree have no business taking a hidden commission at your expense…but it happens all too often.
In fact, according to the Secretary of Housing and Urban Development your neighbors in the United States will overpay Sixteen Billion Dollars this year alone thanks to Yield Spread Premium. The good news is, now that you know what Yield Spread Premium is you can learn how to avoid it.
Check out my free Underground Mortgage Videos and you’ll learn how to recognize and avoid this hidden markup of your mortgage refi rates as well as other junks fees that serve no purpose but to separate you from your hard earned cash.
Here’s a quick sample of what you’ll get with your free Underground Mortgage Refinancing Membership. It’s free, easy to understand, and will only take a few minutes of your time.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
