Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice » California Mortgage Refinance

Refi Problems You Need to Avoid

Robert — Wed, 28 Jan 2009 19:56:23 +0000

If you are considering refinancing your home mortgage loan you might be concerned about refi problems that can arise during the closing process. There are a number of junk fees and markup that can turn that new mortgage loan you’re applying for into an expensive mistake. Here are several tips to help you avoid Refi Problems that result in overpaying for your next mortgage loan.

Refi Problems

Most homeowners have no idea how the person arranging their mortgage is compensated for their work. Assuming you will not be refinancing your mortgage with a bank due to loopholes in the Real Estate Settlement Procedures Act which allows the bank to overcharge without telling you, the next mortgage you have will be arranged by a mortgage broker.

Mortgage brokers are paid for their work by two sources. Brokers can charge you a loan origination fee, often as much as five percent, which you will pay at closing for their part in arranging the loan. One percent is a reasonable amount to pay for loan origination, so don’t be afraid to bring this up when shopping for a loan. The second way mortgage brokers are compensated is with a fee paid by the lenders in the form of Yield Spread Premium.

Mortgage Yield Spread Premium

Mortgage lenders pay a fee to the broker for locking and closing your loan with an above market mortgage rate. You might think this isn’t a problem because the fee is not coming out of your pocket but you need to consider why lenders pay this fee. Lenders reward mortgage brokers for closing loans with above market mortgage rates because these loans bring them a premium profit when the loans are sold to investors on the secondary market. What you need to know about higher than market mortgage rates is that they result in a higher than necessary mortgage payment, a payment you’ll be making every month that you keep your loan.

Here’s an example to illustrate how Yield Spread Premium drives up your mortgage payment unnecessarily. Suppose for example you are refinancing your California mortgage for $350,000. The broker quotes you a mortgage rate of 5.75% and charges you an origination fee of 2%. This means you’ll have to fork over seven thousand dollars at closing for the mortgage broker’s fee. What your broker isn’t telling you is that you actually qualified for a 5.0% mortgage rate and they’ve marked it up to get a commission from the lender.

You might be asking “What’s a measly .75% between friends?” Here’s what that .75% on your mortgage rate does to your monthly payment. Your monthly payment with a mortgage rate of 5.75% on a 30 year fixed rate loan will be $2050. If you had gotten the mortgage rate you qualified for at 5.0% your monthly mortgage payment would be only $1,875 per month! That’s a difference of $2,100 every year that you keep this loan! Still think Yield Spread Premium isn’t a Refi Problem you need to be worried about?

Yield Spread Premium Can Be Avoided

It is possible to refinance your home loan without Yield Spread Premium paying the mortgage broker a flat one percent origination fee for their work. Homeowners who know how to do this are able to take advantage of the wholesale nature of mortgage rates and save thousands of dollars in unnecessary mortgage interest every year. According to the HUD Secretary Yield Spread Premium will be responsible for American homeowners overpaying nearly sixteen billion dollars this year alone! Don’t be a part of this statistic…register for the mortgage refinancing tutorial on this website and you’ll learn how to refinance you home with a wholesale mortgage rate without paying junk fees to the lender or the broker.

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California Mortgage Refinance – Beware Computerized Loan Origination Fees

Robert — Sat, 28 Apr 2007 00:00:24 +0000

If you are in the process of refinancing your California home mortgage on the Internet, Computerized Origination fees could cost you as much as $1,300 for your new loan. This happens to homeowners who do not read disclosure statements found on many of the mortgage sites found online. When shopping for a new California mortgage loan you can find the fees disclosed in the licenses and disclosure statements found on the bottom of many of these sites.

What is a Computerized Loan Origination fees? Many of the sites you visit have absolutely nothing to do with mortgage loans. These are businesses that make money generating leads for mortgage companies. They put up a website to collect your contact information and sell “leads” to the highest bidder. There’s nothing wrong with lead generation sites when the fee is paid by the mortgage company or broker; however, many mortgage lenders pass the fee on to you at closing.

One example of a site that charges you the Computerized Loan Origination fee with your California mortgage is Lending Tree. If you look at the licenses & disclosure statement found on Lending Tree’s website you’ll find that Lending Tree receives as much as $1,300 for selling your information. The bad news is that the lender passes this fee on to you. If you refinance your California home loan with one of the lenders in Lending Tree’s “network,” the Computerized Loan Origination fee will appear on your Good Faith Estimate and you’ll be required to pay it at closing.

You can learn more about refinancing your California mortgage without overpaying with our free mortgage tutorial.

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What Mortgage Companies Do Not Want You to Know When Refinancing

Robert — Fri, 13 Apr 2007 20:55:27 +0000

If you are in the process of refinancing your home loan, your mortgage company has a dirty secret they don’t want you to know. This secret is how mortgage companies overcharge homeowners for the interest rates they receive. If you learn how to recognize this markup of your mortgage interest rate you will save thousands of dollars when refinancing. Here is what your mortgage company doesn’t want you to know when refinancing your mortgage.

How do mortgage companies mark up your interest rate? This markup is called Yield Spread Premium and happens when your loan representative marks up your mortgage rate for a commission from the wholesale lender. Mortgage companies do this without telling you and rarely does this markup appear on your Good Faith Estimate.

Your mortgage company marks up the interest rate you were approved because the wholesale lender pays them a bonus of one percent of your mortgage amount for every quarter percent that they overcharge you. The difference between the mortgage interest rate you qualified and the rate you close is the Yield Spread Premium. Here’s an example of a mortgage refinancing transaction with Yield Spread Premium.

Suppose you are refinancing your California mortgage loan for $500,000. Your mortgage representative tells you that you qualify for a 7.5% interest rate and will pay 1.5% for the origination fees. What your mortgage company isn’t telling you is that you qualified for a 7% mortgage rate before Yield Spread Premium. You’re already paying the mortgage company $5,000 in origination fees; however, they are helping themselves to an additional $10,000 of your money by marking up your interest rate. The mortgage company walks away with $15,000 and you’re stuck paying an unnecessary .5% on a $500,000 mortgage loan. The high cost of California Real estate greatly magnifies the problem of Yield Spread Premium.

How can you avoid paying this ridiculous markup of your mortgage interest rate? Homeowners who learn to recognize Yield Spread Premium can negotiate to avoid paying the markup. You can learn how to avoid Yield Spread Premium and other costly mistakes with our free mortgage video tutorial.

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California Mortgage Refinance: Shopping for the Best Loan

Robert — Thu, 12 Apr 2007 22:23:58 +0000

If you are considering a new mortgage to refinance you California home, comparison shopping can save you a lot of money if you do it correctly. Before evaluating loan offers you need to have a discussion with potential mortgage companies and brokers regarding Yield Spread Premium. The high cost of California real estate severely magnifies the problem of Yield Spread Premium and could result in overpaying thousands of dollars each year.

If you’re not already familiar with Yield Spread Premium when it comes to California mortgage loans, here’s a quick introduction. Yield Spread Premium is the markup of your mortgage interest rate by your broker for a commission. When your application to refinance your California mortgage is approved, you qualify for a specific mortgage rate from the wholesale lender that approved your loan. Your mortgage broker knows the rate you qualified; however, this person marks it up without telling you because the wholesale lender pays them a bonus for overcharging your.

That’s right, for every .25% you overpay for the loan your mortgage broker receives 1% of the loan balance in addition to the origination fees you’re already paying. Factor in the high cost of homes in California and a quarter percent becomes a lot of money. This is money you have to pay month in and month out for as long as you keep the loan.

How do you avoid Yield Spread Premium when refinancing your California mortgage? The first discussion you have with a potential mortgage broker needs to be about Yield Spread Premium. Tell your mortgage broker that you understand how it works and will not tolerate the markup with your new mortgage. Tell your mortgage broker that you will pay a reasonable fee for the origination of your California mortgage and all necessary third party settlement costs but will not accept lender paid compensation. Any honest mortgage broker would agree to these terms. Once you’ve found an honest California mortgage broker you are ready to begin comparison loan offers to find the perfect mortgage for your situation. You can learn more about refinancing your California mortgage loan by registering for our free mortgage tutorial.

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California Home Loan Refinance

Robert — Sun, 08 Apr 2007 01:03:54 +0000

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.

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Refinancing Your California Mortgage Loan

Robert — Fri, 06 Apr 2007 00:09:21 +0000

Refinancing a California mortgage loan can be an intimidating process for many homeowners. Comparison shopping will help you find a variety of loan offers to meet your needs; however, if you want to avoid overpaying for your next California mortgage you need to understand how mortgage companies make their money and speak their lingo. Loan representatives and brokers are paid by commission; the more expensive your loan, the higher their commission.

The California mortgage loan that nets your loan representative the highest commission is probably the worst loan for your situation. This is why it’s important to understand your mortgage needs before you being shopping for a new loan. How do California homeowners overpay for when refinancing their mortgage loans? A little known markup called Yield Spread Premium will account for nearly $16 billion dollars in unnecessary mortgage interest this year, a large portion paid by California homeowners.

What is Yield Spread Premium? The interest rate you qualify is set by a wholesale mortgage lender when your application is approved. This mortgage rate is marked up by your loan representative because that wholesale lender pays them a bonus for overcharging you. That’s right, for every quarter percent that you agree to pay above the mortgage rate you were approved your loan representative receives a bonus of one percent of your loan amount. This bonus is paid in addition to the sizeable origination fees you’re already paying for their services.

The high price of California real estate means you’re already paying a large fee for mortgage origination; often in excess of one percent of your loan amount. If you agree to pay Yield Spread Premium your loan representative gets paid double for their work and you pay thousands of dollars every year unnecessarily. Fortunately, you can avoid the high cost of Yield Spread Premium when refinancing your California mortgage loan. To learn more register for our free mortgage tutorial “Five Things You Need to Know When Refinancing Your California Mortgage.”

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California Mortgage Broker

Robert — Wed, 14 Mar 2007 00:35:24 +0000

Mortgage brokers can be an excellent resource for refinancing your California mortgage loan; however, you have to watch your broker like a hawk to avoid overpaying for your new mortgage. In addition to giving you a mortgage rate that includes Yield Spread Premium, brokers often place homeowners in loans that serve their need for a commission instead of finding you a good deal.

If you’ve already watched the mortgage videos on this site, you’re familiar with Yield Spread Premium and know how mortgage brokers mark up your interest rate to boost their profits. The best way to avoid paying this unnecessary markup of your mortgage interest rate is to be upfront with your mortgage broker before entering into an agreement. Tell your mortgage broker that you’ll pay a reasonable origination fee for their services and all necessary closing costs but will not pay Yield Spread Premium with your interest rate.

Choosing the right type of mortgage for your situation before negotiating with a mortgage broker is also very important. Don’t let a mortgage broker fast talk you into a risky interest only or option Adjustable Rate Mortgage if you don’t fully understand what you’re getting into. The type of mortgage and the term length you choose depends on your financial situation, tolerance for risk, and your goals for the loan.

Most homeowners benefit from a fifteen year term length instead of a thirty year loan when refinancing their California mortgage loans. You will qualify for a lower mortgage rate and will pay significantly less in finance charges with a fifteen year mortgage. The interest rate you should choose depends largely on your tolerance for risk. When used correctly, Adjustable Rate Mortgages can save you a lot of money if you have the stomach for the risk involved. You can learn more about your California mortgage refinancing options, including costly mistakes to avoid with our free mortgage tutorial.

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California Mortgage Refinance

Robert — Mon, 12 Mar 2007 22:38:11 +0000

If you are in the process of refinancing your California mortgage loan, there are several things you need to know to avoid overpaying. The housing market in California is challenging enough for homeowners without someone trying to take advantage of the situation. Unfortunately, this is exactly how mortgage lenders operate. The good news is that if you know how to shop and negotiate for your California Mortgage Refinance loan, you can avoid overpaying. Here are several tips to help you avoid costly mistakes with your California mortgage refinance loan.

Yield Spread Premium is the markup of your mortgage interest rate by your loan originator. California mortgage companies and brokers routinely charge Yield Spread Premium with their loans because the wholesale lender that funds your California mortgage refinance loan pays them a bonus for doing so. For every .25% that you agree to overpay over the mortgage rate you were qualified, your mortgage originator receives a bonus from the wholesale lender of 1% of your loan amount.

When you take out a California mortgage refinance loan you will be required to pay origination fees to whoever prepares your loan. Reasonable origination fees are in the ballpark of 1.5% of your loan amount; however, if you agree to pay Yield Spread Premium you are effectively paying double for your new loan. The good news is that you can avoid paying Yield Spread Premium when refinancing your California mortgage loan.

The first step to avoiding this unnecessary markup of your mortgage interest rate is to check the weekly yield found on Fannie Mae’s website. This will give you an idea of what wholesale mortgage interest rates are without the originator’s markup. Once you have this information you can start comparison shopping for mortgage offers. Tell your loan representative that you will pay a reasonable origination fee and any necessary third party settlement charges, but will not pay any markup of the mortgage rate by their company. Ask to see the mortgage rate sheet from the wholesale lender and compare it to the mortgage rate you were offered. Once you find a mortgage company or broker that agrees to these terms for your California mortgage refinance loan, make sure you get all of the conditions in writing. Verbal agreements are meaningless when closing on a new mortgage loan.

You can learn more about your California mortgage refinance loan options, including other costly mistakes you need to avoid with our free mortgage tutorial.

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