Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice » How to Refinance a Mortgage

Beware Free Credit Report Dot Scam

Robert — Wed, 29 Jul 2009 02:26:02 +0000

If you’re thinking about mortgage refinancing the first thing you should do before all else is check your credit reports. Don’t waste money buying credit reports or signing up for one of those credit monitoring services just to get a “free credit report.” Here are several tips to help you check out your credit prior to refinancing without wasting any of your hard earned cash.

Credit Reports Are Free…Period

Legislation in the United States known as the Fair and Accurate Credit Transactions Act passed in 2003 was intended to help you protect your credit and help prevent identity theft. This law requires the three credit reporting agencies that maintain your credit reports to provide you one free copy of your credit report every year. There are no fees or services to try…this is not to say the credit agencies won’t try and up sell you with a credit score ; however, you really don’t to pay for that either.

Free Credit Report dot what? It seems the Federal Trade Commission has grown a sense of humor. Remember those annoying “Free Credit Report” commercials on TV? Check out the FTC’s spoof of one misleading website’s commercials:

All you need to get a truly free credit report from Equifax, Experian, and TransUnion is to visit the website AnnualCreditReport.com The website is secure and sports the latest encryption; however, if you don’t feel comfortable entering all of your personally identifiable information including your social security number into a website you can get the same reports sent to you by calling 1-877-322-8228 or mailing a written request to:

Annual Credit Request Service
P. O. Box 105281
Atlanta, GA 30348-5281

It’s important to review your credit reports (make sure you check all three) every year in order to catch mistakes or identity theft should you become a victim. Mistakes in your credit report can result in higher interest rates or fees such as security deposits unnecessarily. Millions of Americans in the United States become the victim of identity theft every year. In fact, your chances of becoming a victim are statistically one in twenty.

Before you think about applying for a home loan or refinancing your existing mortgage go over all three credit reports with a fine-tooth comb. If you find mistakes in your credit reports each credit agency has a procedure for disputing errors. Correcting errors in your credit reports is free by the way…don’t let someone con you into purchasing their magical credit repair “kit.” More information about identity theft and protecting yourself is available free of charge on the FTC website at ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357).

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Verbal Interest Rate Lock

Robert — Fri, 20 Mar 2009 21:40:37 +0000

If you are in the process of refinancing your home mortgage there are a number of costly pitfalls that can lead to overpaying thousands of dollars.

Rate locks are commonly misunderstood by many homeowners and not locking properly can lead to an expensive mistake. Here are several tips to help you avoid paying too much for your next home mortgage loan.

Verbal Interest Rate Lock

When it comes to locking in your mortgage rate there is one simple rule. If you haven’t got it in writing, you haven’t got it at all. When it comes to mortgage loans, verbal agreements just don’t exist. You must get it in writing AND the rate lock confirmation HAS to come from the lender, not your mortgage broker. Here’s why.

Many mortgage brokers try and pass off rate lock confirmation written on their own company letterhead. If you have a document from your mortgage broker confirming rate lock, then you do not have written confirmation of the lock. Mortgage brokers do this to conceal the commission they are getting from the lender for marking up your mortgage rate. Lenders pay a premium to mortgage brokers that lock and close home loans with higher than market interest rates. This commission paid to your mortgage broker is known as Yield Spread Premium and can unknowingly cost you thousands of dollars per year.

Bottom line, if your mortgage broker tells you that you have verbally locked your interest rate or they give you a bogus written confirmation typed up on their own letterhead, your mortgage broker is hiding the fact that they’re ripping you off.

Mortgage Yield Spread Premium

Mortgage brokers are compensated for their work by charging you an origination fee for arranging your home loan. They can also receive a commission from the lender for marking up your mortgage rate. For every .25 percent that you agree to overpay when refinancing your mortgage loan, the broker receives a commission of one percent of your loan amount for overcharging you. This markup of .25 percent may not seem like much; however, many brokers charge as much as .75 percent (or more) and over the course of a year this can have a dramatic affect on your mortgage payments.

Here’s a simple example to illustrate how commission based markup of your mortgage rate results in paying too much. Suppose for example you are refinancing your home for $315,000. Your broker quotes you a mortgage rate of 5.75 percent and charges you a fee of 1.5 percent for arranging your loan. On paper these numbers should good; however, consider the 1.5 percent or $4,725 that you’re paying the mortgage broker for “getting you a good deal.”

What your mortgage broker isn’t telling you is that your lender qualified
you for a 5.0 percent mortgage rate but your broker marked it up to 5.75 percent to get a 3.0 percent commission from the lender. That means your broker pockets your $4,725 AND $9,450 from the mortgage lender…that’s a total of $14,175 for overcharging you on your home mortgage loan.

How does this .75 percent affect your mortgage payment amount? Plug the numbers into a simple mortgage payment calculator and you’ll see that in this example the payment amount for a 30 year, fixed-rate mortgage loan of $315,000 at 5.75 percent will be $1,840 per month. If you had the mortgage rate you deserve at 5.0 percent your monthly payment would only be $1,690. That’s a savings of $150 per month or $1,800 per year!

Now you know that a verbal interest rate lock is not the right way to refinance because your mortgage broker is using it to conceal the Yield Spread Premium on your home loan. How can you avoid this costly and unnecessary markup of your mortgage interest rate?

How to Avoid Overpaying Your Mortgage Broker

To avoid paying Yield Spread Premium when refinancing your home loan you simply need to find the right mortgage broker for the job. There are honest brokers out there willing to refinance your home for a flat one percent origination fee without charging Yield Spread Premium on your loan… you just need to find the right one. You don’t have to be a financial guru to pull this off either; learn the lingo and a few tips for negotiation with your mortgage broker and you can walk away with the deal I’m describing for your next home loan. My underground mortgage videos show you how to do just this…all of the information you need to save thousands of dollars on your next mortgage in one easy to follow video tutorial.

So who is the right mortgage broker? It’s probably not going to be the brokers with the full page advertisement in your phone book or the one with a company hummer plastered with their logo. Mortgage brokers with advertising budgets, expensive sales staff, posh office spaces, and company hummers all have enormous operating expenses and will most likely be unwilling or unable to negotiate the type of deal you’re looking for when refinancing your home mortgage.

The right person for the job is a small time self-employed mortgage broker often working from home. This person will have been working as mortgage broker for at least ten years. This kind of mortgage broker will be much more likely to agree to refinance you home for a one percent origination fee without bringing Yield Spread Premium into the picture. You’ll also need to know which fees are garbage and need to be avoided… fees like mortgage broker courier fees for example. You’ll need to know where to spot and how to recognize these junks fees; here’s a tip, you won’t find them on your Good Faith Estimate.

Good Faith Estimate

Speaking of the Good Faith Estimate (GFE), don’t put much faith in this document. The GFE has become little more than a marketing tool used along with the Annual Percentage Rate (APR) to lure unsuspecting homeowners into overpriced mortgage loans. Truth in lending laws require that lenders provide you these documents; however, there are very few standards for what mortgage lenders are required to disclose. Fortunately your lender is required to give you one document prior to closing that will reveal everything your mortgage broker may be working so hard to conceal…

You can learn more about mortgage refinancing without the unnecessary markup of your mortgage rate and lender junk fees by registering for my Underground Mortgage Videos. Register today and you’ll have immediate access in the password protected member’s area to all the mortgage videos without downloading anything to your PC or Mac.

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Refinance Fees You Need to Avoid

Robert — Sun, 11 Jan 2009 20:49:33 +0000

If you are in the process of shopping for a home loan there are a number of Refinance Fees you need to avoid if you don’t want to overpay. Many of these fees are charged by the lender; however, there are several refinance fees that do nothing but line your mortgage broker’s pockets. Here are several tips to help you avoid paying too much for your next mortgage loan.

Refinance Fees

When refinancing your home mortgage loan you can reasonably expect to pay many of the same fees you paid when purchasing your home. The problem is that you probably didn’t have a good idea which of those fees were necessary and which were pure garbage when you purchased your home. Refinance fees typically come from three sources: the lender, the broker, and third party companies involved with closing your mortgage.

Mortgage Broker Refinance Fees

Honest mortgage brokers explain their fees upfront and will typically only charge you a loan origination fee. This refinance fee will often appear in your loan documents as “origination points” and a reasonable amount to pay for loan origination is one percent of your mortgage amount. Many brokers charge as much as five percent or more; however, you should never agree to pay this much for a mortgage broker’s services.

There are a number of mortgage broker junk fees you’ll want to keep an eye out for when refinancing. At the top of this list is the so called “rate lock fee.” Lenders never charge a fee for locking in your mortgage rate. If your mortgage broker is charging you a fee for locking in your interest rate you’re probably dealing with a dishonest mortgage broker. Another warning flag to watch out for is if your broker verbally locks your mortgage rate or provides you a written lock on company letterhead. Rate lock confirmation should always come from the lender and be confirmed in writing. If you have verbally locked your mortgage rate you haven’t locked anything.

Dishonest mortgage brokers pass of their own rate lock confirmation and tell you the rate lock from the lender is proprietary or confidential and that you cannot see it. They tell you this because they’re hiding a fee they receive from the lender for marking up your mortgage rate…more on this fee later; however, you know you are dealing with a 100% dishonest mortgage broker if they will not show you the rate lock confirmation in writing from the lender. Other junk fees include broker courier fees and processing fees. If you find these on your Good Faith Estimate or HUD-1 statement you’ll want to have a heart-to-heart with your mortgage broker and strongly consider taking your business somewhere else.

Mortgage Lender Refinance Fees

Once your mortgage broker has completed processing your application the loan is transferred to underwriting at your mortgage lender. You can expect to pay underwriting fees at this stage of the game however, most of the lender fees are not junk fees and cannot be avoided. Your mortgage company or broker is responsible for 90% of the junk fees you’ll encounter when refinancing your mortgage loan unless you refinance with a bank or credit union.

Many homeowners think they’ll get the best deal and avoid junk refinance fees by sticking with their bank or credit union. Unfortunately this simply isn’t true…banks and credit unions are exempt from key legislation in the United States known as the Real Estate Settlement Procedures Act that requires mortgage companies and brokers to disclose their profit margins and markup on your loan. This means if you refinance your home loan with a bank or credit union you’ll never know how much they’ve marked up your mortgage loan or how much you’ve overpaid. Never refinance your home mortgage with a bank or credit union.

Hidden Refinance Fees

Now that you know banks and credit unions are a bad idea there is one hidden fee you need to know about before choosing a broker to refinance your home loan. Mortgage brokers receive their compensation for arranging your loan from two sources. We’ve already discussed loan origination fees and you now know that a reasonable fee to pay your broker is one percent of your loan amount, but what about this “hidden” compensation? Did you know that mortgage lenders reward brokers for overcharging you? This reward doesn’t come from overcharging you on refinance fees but by marking up your mortgage interest rate.

Mortgage lenders know that the majority of their profit comes from selling your home loan to investors on the secondary market. What better way to boost their profits by selling your loan with an above market mortgage rate for a premium fee. This is why mortgage lenders reward brokers for marking up your mortgage rate. This markup of your mortgage rate creates a percentage of your loan amount for the Mortgage Company or broker. Known as Yield Spread Premium this fee is a cash bonus paid when you lock and close your mortgage loan with a higher than market mortgage rate.

Yield Spread Premium is usually disguised in your loan documents and rarely talked about by your broker. In fact, many mortgage brokers become angry and defensive when questioned about Yield Spread Premium. This is another warning flag that you’re dealing with a potentially dishonest broker if they refuse to discuss Yield Spread Premium on your loan. How can you spot this unnecessary markup of your mortgage rate? I’ll tell you…

Your first opportunity to recognize and avoid Yield Spread Premium comes not on the Good Faith Estimate but on the rate lock confirmation from your lender. This is why many dishonest mortgage brokers refuse to show you the confirmation claiming that it’s confidential and proprietary. Rubbish! They just don’t want you to see how much they’ve marked up your mortgage rate and the fee your lender is paying them for overcharging you!

Why Yield Spread Premium is Bad

You’ve learned how mortgage brokers make money from arranging your loan and you’ve learned about Yield Spread Premium; however, you might be asking why should I care about a fee paid by the lender? After all it’s not coming out of my pocket right? Wrong! It’s not the fee you should be concerned about but rather the reason your mortgage lender is paying this fee. Remember your mortgage broker receives this fee for marking up your mortgage rate. Your broker is paid one percent of your loan amount for every .25 percent they markup of your interest rate. What does this markup do to your monthly payment amount?

Suppose you’re refinancing your home for $300,000 and the broker quotes you a mortgage rate of 5.5 percent, charging you a loan origination fee of one percent or in this case $3,000. Sounds like a good deal right? What you don’t know is that you actually qualified for a 5.0 percent mortgage rate and the broker marked it up by .5 percent to get a bonus from the lender of $6,000. What does this markup do to your payment? At 5.5 percent on a fixed rate 30 year mortgage your monthly payment will be $1,700 per month. If you had the mortgage rate you deserve at 5.0 percent your monthly payment would be only $1600 per month! That’s $1,200 a year you’re throwing away just to give your mortgage broker an unnecessary bonus for overcharging you!

Happily Yield Spread Premium can be avoided. If you’ve read this far you’re head and shoulders above most homeowners out there who have never heard of Yield Spread Premium. You can learn more about avoiding the unnecessary markup of your mortgage rate and other junk fees by registering for the free mortgage videos on this website.

Check out my Underground Mortgage Videos today and you’ll have instant, online access to these award winning mortgage videos and all resources in our password protected member area for free.

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Wholesale Mortgage Lenders

Robert — Sun, 28 Dec 2008 20:56:03 +0000

If you’re considering refinancing your home mortgage loan in 2009 and are looking for a wholesale lender there are several things you need to know in order to take advantage of wholesale rates. As a member of the public you cannot simply contact a wholesale lender expecting to refinance your home mortgage with a wholesale mortgage rate.

Here are several tips to help you take advantage of wholesale mortgage rates when refinancing without hidden retail markup of your loan.

What Are Wholesale Mortgage Lenders?

Wholesale mortgage lenders offer loans exclusively through mortgage brokers. Period. You cannot get a wholesale mortgage loan from your bank or credit union no matter what the banker or your neighbor Bob tells you. The reason for this is due to a little know loophole in the Real Estate Settlement Procedures Act that allows banks to hide their markup and profit margin on your loan. Your banker will show you the Bank’s mortgage rate sheets and swear the rates have not been marked up; however, the Banks mortgage rate sheets already include the markup known as Service Release Premium to boost the banks profits when your loan is sold on the secondary market.

What Are Wholesale Mortgage Rates?

Wholesale mortgage rates, also known as par mortgage rates, are interest rates that do not include any Yield Spread Premium or discount points to get them. Yield Spread Premium is a percentage of your loan amount created when the Mortgage Company or broker locks and closes your loan with an above market mortgage rate. This is typically done to create a commission for the broker. Discount Points are a form of prepaid interest due at closing paid to the lender in exchange for a lower mortgage rate. Wholesale mortgage rates include neither Yield Spread Premium nor discount points.

Why Can’t You Just Call Up a Wholesale Lender?

You can certainly call up a wholesale mortgage lender, they all operate retail divisions; however, you will be offered a retail mortgage loan with the same markup as if you had gone through a typical mortgage broker. If banks and wholesale lenders are out of the question how does one go about refinancing with a wholesale mortgage rate? In order to take advantage of wholesale mortgage rates you’ll have to find a mortgage broker willing to work for a flat origination fee without marking up your mortgage rate for Yield Spread Premium.

Finding The Right Mortgage Broker is Easier Than You Think

First, you’ll need to do a little homework learning when and where you can recognize Yield Spread Premium in your loan documents. Second, you’ll need to know how to negotiate with mortgage brokers and where to look for a broker willing to work for a flat origination fee of one percent without marking up your mortgage rate. There are honest mortgage brokers out there willing to work for a flat origination fee of one percent without taking Yield Spread Premium on your loan…you just need to know where to look to find one.

You can learn more about refinancing your home loan with a wholesale mortgage lender by registering for the free mortgage videos on this website. When you register you’ll get a list of mortgage brokers in your area that do not work for Yield Spread Premium and learn how to recognize and avoid lender junk fees.

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How to Refinance a Mortgage

Robert — Sun, 14 Sep 2008 23:14:39 +0000

If you are considering taking advantage of lower mortgage rates to get a lower mortgage payment and are looking for information on how to refinance a mortgage, here are several tips to help get you started.

You should know that mortgage brokers are the key to getting a good deal when refinancing; however, you should also know that these people earn their living by commission.

The home loan that gets your mortgage broker the largest commission is probably not going to be the best loan for you.

How to Refinance

Refinancing your home mortgage is not all that different from any other purchase you make. Mortgage loans are retail products meaning that there is a middleman that marks up your loan for a profit. You already know that buying consumer products wholesale can save you a bundle of cash; the same is true when it comes to your mortgage loan. Mortgage brokers have access to wholesale rate Find the right broker and you can get a wholesale rate when refinancing your home loan.

How Mortgage Brokers Are Paid

There are several ways mortgage brokers are compensated for arranging your mortgage loan. Your Broker can charge you origination fees at closing. Your broker could also markup up your mortgage rate for a commission from the wholesale lender behind your mortgage. Mortgage brokers also charge a number of fees considered to be “junk fees.” One example of a junk fee you might find on your Good Faith Estimate is a “Mortgage Broker Courier Fee.” This is a made-up fee headed straight for your broker’s pocket if you agree to pay it.

How to Refinance a Mortgage with a Wholesale Rate

You can get a wholesale mortgage rate for your loan by finding the right mortgage broker. The best brokers don’t work for large companies like Countrywide or for large mortgage web sites like Lending Tree. The best mortgage brokers are local and self employed. Find a self employed mortgage broker working out their home? Better still. The reason small time self employed mortgage brokers are better is because they do not employ a sales staff or in many cases pay for posh office spaces. You’re much more likely to negotiate a good deal from this type of broker simply because they can afford to do so.

Mortgage Terminology 101: Yield Spread Premium

The first term you need to know when learning how to refinance a mortgage is Yield Spread Premium. This is simply the fee paid by your lender because the broker marks up your mortgage rate. This markup is what makes mortgage rates retail. The lender rewards the broker with one percent of your mortgage rate for every quarter percent they markup up your interest rate. You won’t find Yield Spread Premium on your Good Faith Estimate and many brokers get defensive, even angry when you ask them about it.

There are two ways to find out if your mortgage broker is marking up your mortgage rate for Yield Spread Premium. The first place this markup is disclosed is on the rate lock confirmation from the lender. Ask your broker to see the original rate lock confirmation. If the broker refuses because it’s “confidential” from the lender you know that they are not being honest with you and are lying about your mortgage rate. Find another mortgage broker willing to show you the lenders rate lock confirmation.

The second opportunity you’ll have to spot Yield Spread Premium is on your HUD-1 Settlement Statement. Yield Spread Premium will be disclosed in section 800 on the HUD-1 around lines 810-811. Many brokers try and disguise their commission…it could be listed as Mortgage Broker Rebate or Yield Spread Premium paid to broker.

Where to Go from Here

Avoiding Yield Spread Premium is the most important aspect of getting a good deal for your home loan. You can learn more tips for saving money, including how to recognize junk fees, by registering for the free video tutorial on this site.

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The Hidden Cost Of Mortgage Points When Refinancing

Robert — Wed, 16 Apr 2008 00:17:57 +0000

Points are one of the most misunderstood aspects of mortgage loans.

In the simplest definition mortgage points are a percentage of your loan amount due at closing for one of two possible reasons.

Here are the basics you need to know about mortgage points and how you can decide if paying them is worthwhile when refinancing your home mortgage loan.

Types of Mortgage Points

Mortgage points come in two flavors. One point is equal to one percent of your mortgage amount and is the fee you’ll be required to pay at closing. There are the discount points you pay to the lender in exchange for a lower mortgage rate and the origination points you pay to the broker for their part in arranging your loan. Brokers and lenders do not always require that points be paid; however, some lenders hide their point requirements in the fine print hoping to distract you with an unnaturally low mortgage rate.

If you don’t agree to pay the points required for that low mortgage rate you’ll find the actual interest rate is often much higher than the going market rate. This is a common bait and switch tactic used by mortgage lenders to boost their profits. Fortunately once you understand how points work this is an easy scam to avoid.

Should You Pay Mortgage Points?

Deciding whether or not paying points to the lender is in your best interest depends on how long it will take you to recoup the expense based on the lower monthly payment you are getting. We’ve all seen the commercials on television promising insanely low rates with a lot of very small print flashed up on your screen. If you pause the commercial and squint you can just make out that this lender requires two points at closing to qualify for this low rate. Does it make sense to pay the fee?

You can easily determine this with a simple mortgage payment calculator. First compare the lower payment with points to the higher payment without points. The difference between the two payments is your monthly savings. Suppose you were refinancing a $200,000 loan with this lender. Two points would amount to $2,000 due at closing. If the monthly payment is $35 lower it will take you almost five years to recoup this expense. If you plan on staying in your home for the long term paying points can be beneficial; however, if you sell your home before this you’ll be losing money by paying points.

What About Origination Points?

Mortgage brokers often charge origination points for their part in arranging your loan. Not every mortgage charges origination points as brokers can receive compensation from the lender behind your loan. If your broker is charging you a fee for arranging your loan a reasonable fee to pay is 1-1.5% of your loan amount.

You can learn more about your mortgage refinancing options including costly mistakes to avoid by registering for my free video tutorial.

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How Mortgage Rates Work

Robert — Thu, 31 Jan 2008 21:57:57 +0000

Are you considering taking out a new mortgage to refinance you existing loan and want the lowest possible mortgage rate? Did you know that wholesale mortgage are available to the average homeowner who knows how to get them and can save thousands of dollars? Here are several tips to show you how rates are quoted so that you can take advantage of wholesale mortgage rates.

Banks vs. Mortgage Brokers

There are basically two types of rate quotes out there today. There are mortgage rates quoted by banks that fund loans with their own money and rates quoted by mortgage brokers reselling loans from wholesale lenders. Both types of mortgage rates are considered “retail” mortgage rates because they include markup. Banks mark up their mortgage rates to make a profit when selling their loans to investors and mortgage brokers mark up their rate quotes to get a bonus from the lender for closing loans with above market mortgage rates.

Take out a mortgage from either one of these and you’ll pay too much just to give someone a profit. If retail mortgage rates are inflated to give someone a commission, how do you refinance your home loan without paying too much? The first thing you need to do when shopping for a mortgage is avoid your bank completely. Your bank will never negotiate with you over mortgage rates or fees because they don’t need to; banks aren’t even required by law to disclose their markup or profit margins on your loan thanks to a loophole in the Real Estate Settlement Procedures Act. With this in mind why would you give your business to someone that doesn’t have to play by the rules?

Understanding Yield Spread Premium

Now that you’ve ruled out banks for your next mortgage you need to understand how wholesale mortgage rates work. These rates are offered by wholesale lenders that do not deal with the public directly; you might think you can avoid the broker by contacting a wholesale lender yourself…the only problem is that every wholesale lender has a retail division that deals with the public. Only mortgage brokers have access to wholesale mortgage rates.

Now that you know that mortgage brokers are the only way to get wholesale mortgage rates, how can you find one that won’t rip you off? While it’s true that mortgage brokers have earned a reputation for being sleazy sales types there are honest people working in the industry…you just have to find them and learn how brokers make their money.

How Mortgage Brokers Are Paid

Brokers receive compensation from two sources in a typical mortgage transaction. When taking out a mortgage you are usually required to pay an origination fee for the broker’s services. Many brokers charge a “loan processing fee” on top of their origination fee; however, this processing fee is a garbage fee you should not agree to pay. What is a reasonable fee for loan origination? One point, or one percent of your loan amount is reasonable and fair compensation for your mortgage brokers services.

The second way that mortgage brokers receive compensation is from a commission paid by the lender. Commissions are usually paid for selling something…so you might be surprised what exactly your broker sells to earn this commission…it’s a higher mortgage rate. That’s right…your mortgage broker receives a commission from the lender for closing loans with above market mortgage rates. This commission is called Yield Spread Premium and according to the Secretary of Housing and Urban Development is responsible for homeowners in the United Sates overpaying billions of dollars for their home loans every year.

You Can Avoid Yield Spread Premium

Understanding that the rate quotes you receive include commission based markup is the first step to avoiding it. Your mortgage broker receives one percent of your loan amount for every quarter percent that you agree to overpay…tell your potential mortgage brokers that you understand how Yield Spread Premium works and you’ll be in a much better place to negotiate for a wholesale mortgage rate.

You can get started by contacting local mortgage brokers in your telephone book and tell them that you will pay a reasonable fee for loan origination but will not accept a mortgage that includes lender paid compensation or Yield Spread Premium. When negotiating with mortgage brokers you may be more likely to be successful negotiating with mortgage brokers that are self employed; representatives at a large brokerage firm may not have the authority or willingness to negotiate over Yield Spread Premium.

You can learn more about mortgage rates and refinancing your home with the lowest possible rate by checking out my free Underground Mortgage Videos. Register today while these videos are still a free offer and you’ll learn how to avoid the retail markup and garbage fees that you hear about in the news.

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How Do Adjustable Rate Mortgages Work

Refinancing Your Mortgage Loan During a Recession

Robert — Tue, 22 Jan 2008 23:34:22 +0000

Every time you turn on the television these days it seems like the news is bad. Today the story was “World Markets Plummet” like a newspaper headline from a comic book. While today’s news may be filled with stories of higher unemployment and a faltering economy, there is good news for homeowners who are looking to refinance their mortgages. Mortgage rates have been falling and remain at very low levels. Savvy homeowners who understand wholesale rates can refinance with mortgage rates as low as 5.25%.

The mortgage industry is currently shouldering the blame for most of our current economic problems; however, these lower mortgage interest rates could not have come at a better time. Lower mortgage rates cause an increase in buyer demand and allow struggling homeowners the opportunity to refinance with lower payments. Whether or not lower interest rates will help prevent a recession is yet to be seen; however, there is a real opportunity for homeowners looking to refinance their mortgages.

Trends in Mortgage Rates

The Federal Reserve is expected to continue lowering the discount rate in an attempt to stem inflation and stimulate our economy in the hope of preventing a recession. The Federal Reserve started lowering interest rates in August of 2007; however, there has been little improvement in the economy thus far. While the Federal Reserve does not control mortgage rates, these rates are heavily influenced by the Federal Reserve and the economy. When the Federal Reserve started lowering short-term interest rates in August of 2007 mortgage rates reacted accordingly and have been declining ever since. This trend is welcome news as mortgage rates had been as high as 7% for many homeowners prior to August of 2007.

Will Mortgage Rates Bottom Out?

If you’re on the fence about refinancing your mortgage you might think that by watching rates you can get a better deal when mortgage rates drop further. Heck, rumor has it the Fed will keep lowering interest rates to simulate our dismal economy. Just keep in mind that what the Fed does with short term interest rates doesn’t mean mortgage rates will follow. Mortgage Rates are a market rate based on risk and reward; there is no reason for mortgage rates to be artificially low just to stimulate economic growth. If you gamble now and wait you could find mortgage rates back over 6%…mortgage rates are next to impossible to predict and anyone that claims they can is trying to sell you something.

Basically if you have seen mortgage rates drop enough to cover your closing costs and come out ahead after refinancing, now is the time to get a new home loan. You can learn more about refinancing your mortgage and protecting yourself from the economy and greedy mortgage brokers by registering for a free video tutorial. Register now while this is still a free offer; the videos will show you how to refinance with a wholesale mortgage rate without paying lender junk fees.

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Should You Refinance Your Mortgage?

Robert — Fri, 11 Jan 2008 23:53:47 +0000

The average homeowner in the United States refinances every four to five years for a variety of different reasons. Many people refinance to lower their mortgage rate; however, consolidating bills or borrowing cash are also good reasons for refinancing. Is mortgage refinancing right for you? Here are several tips to help you decide if mortgage refinancing is right for you.

Are Mortgage Rates on the Rise?

Did you purchase your home with an Adjustable Rate Mortgage and are concerned how rising rates will affect your monthly payment? If this is you, refinancing your mortgage with a fixed rate loan allows you to lock in your mortgage rate and payment amount. You won’t have to worry about payment shock when that statement from the lender arrives after your Adjustable Rate Mortgage resets. If you already have a fixed rate mortgage and rates are rising there are still good reasons for refinancing even if getting a lower mortgage rate isn’t one reason.

Are Your Payments Too Much to Manage?

If your budget is struggling under the weight of your mortgage payment you could get a lower mortgage payment by refinancing even if you cannot get a lower rate. By extending the term length of your new loan you can get a lower payment by spreading your mortgage out over more time. This is a more expensive option as you will pay more to your lender for the financing; however, if you are in a cash crunch refinancing with a longer term length could be your answer.

Is Your Option ARM Headed For Trouble?

Many homeowners used risky option adjustable rate mortgages to purchase their homes because they couldn’t qualify for traditional financing. If you did this and have only been making the minimum payment you’re headed for big trouble. The problem with only making the minimum payment with an Option ARM is that it does not cover all of the interest due in a given month. The unpaid amount of interest is simply added to your mortgage balance each and every month. This means your loan is actually growing over time.

When your loan reaches a certain amount of negative equity, often 125% of your original balance your lender will “recast” your loan to a standard Adjustable Rate Mortgage amortized for the time remaining on your loan contract. Suppose you’ve been making this payment for five years on a thirty year mortgage; your new loan will have a term length of 25 years with a balance of 125% of you borrowed. Your payments will skyrocket. If you’ve barely been making ends meet with the minimum payment amount you’re destined to lose your home to foreclosure when this happens. If this describes your situation, don’t delay…refinance now before it’s too late.

Has Your Financial Situation Improved?

If your finances have improved since purchasing your home you may qualify for a lower mortgage rate. Did you get married and now have two incomes? Did you get a better paying job or pay off some of your debts? If your credit score is higher now than when you purchased your home you could qualify for a much better rate and lower your monthly payment at the same time.

Do You Have Private Mortgage Insurance?

If you used a 100% mortgage loan to purchase your home the lender might have required you to purchase Private Mortgage Insurance (PMI) at the time. The premiums for this insurance are included in your monthly payment and can add hundreds of dollars to your bill each month. You can save yourself some money by asking your lender to cancel your insurance; as long as you’ve been making your payments on time and have reached a certain amount of equity in the home the lender will cancel your PMI. If cancelling your PMI is not an option refinancing could save you a hundred dollars each month; even more.

Do You Want to Borrow Cash or Consolidate Bills?

If you have equity in your home this money is available to you for any reason you like. You can use this to pay off high interest credit cards, use the money to renovate or repair your home. Because you’re borrowing against the equity in your home you can use this money for any reason; there are no limits or restrictions on how your use of the cash.

You can learn more about refinancing your mortgage with a wholesale mortgage rate without paying lender garbage fees with a free mortgage DVD. Register today, the DVD is yours with no strings attached whatsoever.

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Mortgage Refinancing – Five Common Mistakes

Robert — Sat, 24 Nov 2007 23:25:42 +0000

The mortgage industry is undergoing the worst crisis lenders have ever faced; if you’re considering refinancing your mortgage it’s more important than ever do your homework and choose an honest lender. Here five common mortgage refinancing mistakes you need to avoid in order avoiding paying too much for your next loan.

Mistake Number One: Going for the “Cheapest” Loan

The cheapest mortgage offer isn’t necessarily the best loan for your situation. Turn on the television and you’ll see lenders bragging about their “unbelievable mortgage rates” or “no closing costs” loan offers. These loans are nearly always loaded with fees and unnecessary markup of your mortgage interest rate; always treat these loan offers with a healthy dose of skepticism. Most mortgage representatives are simply trying to get your application and commit to the loan; after you’ve done this you are at the mortgage company’s mercy for rates and fees. This is why you should choose loan offers carefully and make sure nothing changes once you’ve committed to a loan offer.

Mistake Number Two: Comparing Dissimilar Loan Offers

When you’re comparing mortgage offers it’s important to compare similar loan types. Comparing a 30 year fixed rate mortgage to a 15 year loan with an Adjustable Mortgage Rate does you no good. Keep in mind that a company with great fixed rate loans may not have the best adjustable rate offers. Make sure you are using the Good Faith Estimate to compare loan offers and are making apples to apples comparisons before choosing a lender.

Mistake Number Three: Relying on the Annual Percentage Rate

Many people think the Annual Percentage Rate (APR) is the best way to compare loan offers. While it’s true that Truth-in-Lending laws require lenders to publish Annual Percentage Rates, which is supposed to tell you the total cost of a loan expressed as an annual percentage, there is no standard for calculating this rate. The APR from one lender may not reflect the same costs as an APR from another, making this figure completely useless.

Mistake Number Four: Not Requesting a Good Faith Estimate

Mortgage lenders are required to provide you the Good Faith Estimate after receiving your application; however, most lenders will provide you this document upon request. This document is an itemized list of all expected fees you will be responsible for paying; however, keep in mind that the Good Faith Estimate is only an estimate. Dishonest mortgage companies change loan offers and terms after you’ve committed to a loan. This is why it’s important to reconcile your Good Faith Estimate with the HUD-1 statement before signing the contract.

Mistake Number Five: Shopping Over a Period of Time

Interest rates change on a daily basis. If you do your comparison shopping over a period of days or weeks the mortgage rates you compare may no longer be available. Try to limit your comparison shopping to one morning or afternoon at a time. This will allow you to keep up with changing interest rates.

You can learn more about your mortgage refinancing options, including other mistakes to avoid by registering for a free video tutorial. The videos walk you through the entire process of refinancing with a wholesale mortgage rate, saving you thousands of dollars in the process.

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Mortgage Refinancing Advice

Robert — Fri, 13 Jul 2007 19:24:25 +0000

If you are in the process of refinancing your home mortgage you might have discovered that everyone and their cousin Jim has advice for you on finding the best deal. While most of the individuals offering advice have good intentions, there is a lot of bad advice and misinformation available, especially online that could cost you thousands of dollars. Here are several tips to help you avoid bad mortgage refinancing advice and find the perfect mortgage when refinancing.

Some of the worst mortgage refinancing advice is freely available on the internet. Everything from “Never refinance unless the new mortgage rate is 2% lower than your existing rate” to “Choose the mortgage with the lowest Annual Percentage Rate” to “Refinance with your Bank or Credit Union” is not only bad advice but could result in overpaying thousands of dollars for your new mortgage.

The Two Percent Refinancing Rule

The “Two Percent Mortgage Refinancing Rule” states that you should never refinance your mortgage unless your new interest rate is two percent lower. While there are plenty of good reasons for refinancing your loan with a higher interest rate; if you qualify for a lower mortgage rate it makes sense to evaluate the new loan on a costs/savings basis rather than just “two percent lower”

You can calculate cost/savings by dividing your total cost from refinancing the mortgage by the amount you save each month with the lower payment. Divide this figure by twelve and you’ll have the number of months it will take you to break even and realize any savings with your new loan. If you can live with this break even point it makes sense to refinance your mortgage.

Use the Annual Percentage Rate When Refinancing

The Annual Percentage Rate or APR was intended to allow borrowers to determine the overall cost of borrowing expressed as an yearly percentage of the loan amount. Lenders are required by law to disclose the APR; however, there is no standard for calculating this APR. Many lenders include and omit fees that give them the most favorable numbers; this makes the Annual Percentage rate completely worthless for choosing the best mortgage when refinancing.

How can you comparison shop for the best loan. Rather then make an apple to oranges comparison using the Annual Percentage Rate the best way to compare loan offers is to use the Good Faith Estimate and HUD-1 statement. Many people argue that the Good Faith Estimate is just an estimate and is as worthless as the APR; however, by reconciling your Good Faith Estimate against the HUD-1 statement you can ensure you’re getting the mortgage deal promised to you.

Refinancing With Your Bank is The Way to Go

This is probably the worst mortgage advice in the history of bad mortgage advice. The problem with banks and credit unions is that thanks to Banking Lobby they are exempt from the Real Estate Settlement Procedures Act. This legislation, also known as RESPA, protects homeowners in the United States by requiring mortgage lenders to disclose their profit margin and markup of your loan. Banks exploit this loophole in the RESPA laws by charging homeowners the markup known as Service Release Premium.

This markup exists only to boost the bank’s profit when selling your loan to investors on the secondary market. Because the bank is exempt from RESPA laws they are not required to disclose the markup and will never tell you the mortgage rate you could have had if you refinanced your mortgage somewhere else.

You can learn more about refinancing your mortgage without overpaying by checking out my free mortgage video toolkit. Register today and you’ll get instant online access to my Underground Mortgage Videos without downloading anything to your computer’s hard drive.

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How to Refinance a Mortgage

Robert — Mon, 02 Jul 2007 23:16:04 +0000

If you’re a homeowner “newbie” looking to refinance your mortgage for the first time or a seasoned real estate investor looking for money saving tips when refinancing you need to learn everything you can about Yield Spread Premium. According to the Secretary of Housing and Urban Development, homeowners in the United States will overpay nearly sixteen billion dollars this year because of Yield Spread Premium and other fees.

So what is Yield Spread Premium? Most homeowners have never heard of Yield Spread Premium even though the topic is on the news and hotly debated in Congress. Yield Spread Premium is simply the difference between the wholesale interest rate your mortgage lender approved you and the above market rate you agreed to pay at closing. Why on earth would you agree to pay an above market mortgage rate? Because most homeowners have never heard of Yield Spread Premium and have no idea how it works.

Yield Spread Premium serves one and only one purpose; to reward loan originators for closing mortgage loans with above market rates. Wholesale lenders pay a bonus of one percent of your mortgage amount for every .25% you overpay when refinancing. This bonus is paid in addition to the origination fees you are probably already overpaying. (Paying anything over 1% for origination fees is highway robbery)

The problem with Yield Spread Premium is that your mortgage broker is never going admit that they’ve marked up your interest rate and the disclosure is cleverly disguised on your HUD-1 statement. (Usually found around lines 810-812) This lack of honest disclosure is why 97% of homeowners blindly accept mortgages that include Yield Spread Premium.

You came here today looking for information on “How to Refinance a Mortgage.” The single most important thing you need to know about mortgage refinancing is that you cannot accept a loan that includes Yield Spread Premium. You can start by telling your mortgage broker that you understand how Yield Spread Premium works and will not accept a mortgage that includes the markup. This tip alone will save you thousands of dollars in lender finance charges. You can learn more about refinancing your mortgage without overpaying with our free mortgage toolkit.

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