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Home Mortgage Refinancing Rates

Robert — Fri, 10 Apr 2009 18:20:09 +0000

Are you searching the Internet for Home Mortgage Refinancing Rates?

Mortgage rates are at their lowest levels in history so it’s very easy to find a good rate; however, if you want the lowest mortgage rates possible without overpaying the broker for a loan that doesn’t include junk fees there are a few things you’ll need to know.

Here are several tips to help you avoid overpaying for your next home loan while getting super low home mortgage refinancing rates.

Home Mortgage Refinancing Rates Online

The Internet is an excellent tool for researching mortgage rates; however, there are several precautions you need to take. If you’re looking at one of the big mortgage sites like Lending Tree, always check out their disclosure statement to see how they get paid for their services. Here’s a sample from Lending Tree’s disclosure statement…

Lending Tree does not charge you (the homeowner) any fee for its services. Computerized loan origination fees paid by the Lender may be included in your mortgage rate, points or loan term and will be shown on your settlement statement. (Meaning you’re paying the fee indirectly…still sounds like you’re paying Lending Tree a fee to me, what do you think?)

What’s a computerized loan origination fee anyway? Many of the websites you find on the Internet like Lending Tree do nothing but collect information and sell it to mortgage companies and brokers for a fee. The broker or lender turns around and passes the fee on to you in the form of a Computerized Loan Origination Fee which will appear on your Good Faith Estimate and HUD-1 Settlement Statement. Do you need to pay this fee to the Lending Trees of the world for selling your information? Absolutely not…

What about your mortgage rate? According to Lending Tree, the fee that they receive can also be included in your mortgage rate. The markup of your mortgage rate for a fee is known as Yield Spread Premium and you should know that the Secretary of Housing and Urban Development recently said this markup will cost American homeowners sixteen billion dollars this year alone…

Lending Tree’s claims of not charging a fee for their services simply aren’t true. The fee still comes out of your pocket; it’s just not paid to lending tree directly… When you pay this the form of a higher mortgage rate it’s the fee that keeps costing you all year long.

Lending Tree isn’t the only one out there that marks up your mortgage rate for fun and profit; in fact, most mortgage brokers routinely include Yield Spread Premium in their loans without fully explaining what they’re doing. Many mortgage brokers will tell you not to worry about this fee because it’s not coming out of your pocket; however, it’s not the fact that your lender is paying the broker a fee, but why they’re paying this fee that should concern you.

Yield Spread Premium: What You Need to Know

In the simplest definition Yield Spread Premium is a percentage of your loan amount (cash) created for the mortgage broker when they lock and close your home loan with an above market mortgage rate. This markup of your mortgage rate leads to a higher monthly payment and more cash out of your pocket. In fact, the mortgage broker is paid one percent of your loan amount for every .25 percent they markup your rate. The markup of .25 percent doesn’t sound like much but it can add a hundred dollars or more to your payment, adding up to thousand dollars or more per year.

There is good news since you’re reading this today… Yield Spread Premium can be avoided. It is possible to find a mortgage broker willing to arrange your home loan for a one percent origination fee without marking up your mortgage rate for a commission. You just need to know how to negotiate the deal. My Underground Mortgage Videos show you how to do just this while avoiding lender junk fees. You’ll also learn what you can do to give your credit a tune-up prior to applying.

Bank Mortgage Loans & Service Release Premium

Some homeowners think they can avoid mortgage broker’s fees and markup by refinancing their mortgage loan with a bank or credit union. The bad news is the bank charges the same markup on your mortgage rate as the broker; it just has a different name. Banks markup their mortgage rates to make a profit when your loan is sold to investors on the secondary market… loans with higher than market rates bring the bank premium profits.

When the bank marks up your mortgage rate to make this profit the markup is called Service Release Premium. The bank is not required to disclose this markup to you because they are exempt from the Real Estate Settlement Procedures Act which requires mortgage brokers to disclose the Yield Spread Premium the receive from the lender. Because banks don’t have to disclose their markup or profit margin on your mortgage you’ll never get as good a deal from your bank as you could refinancing your mortgage with an honest mortgage broker.

You can learn more about getting the best possible Home Mortgage Refinancing Rates without lender junk fees by registering for my Underground Mortgage Videos. Register today and you’ll have immediate access to the mortgage videos and a list of mortgage brokers in your area that do not mark up rates for a commission in my password protected member’s area, without downloading anything to your PC or Macintosh.

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Best Mortgage Rate 2009

Robert — Fri, 16 Jan 2009 19:58:58 +0000

If you’re considering refinancing your home mortgage loan and are looking for the best mortgage rate in 2009, there are several things you need to know in order to avoid overpaying for the new loan.

Most homeowners have heard of mortgage junk fees but very few are familiar with the evils of Yield Spread Premium or how it raises your monthly payment unnecessarily. Here are several tips to help you get the best mortgage rate in 2009 when mortgage refinancing.

What is Yield Spread Premium?

Mortgage brokers receive compensation for their work in two ways. Your broker will typically charge you an origination fee for their part in arranging your loan which will be disclosed on your Good Faith Estimate. This fee could be as much as five percent but typically runs anywhere from 2-3%. One percent is actually a reasonable fee to pay your mortgage broker for loan origination.

The second way mortgage brokers receive compensation is from Yield Spread Premium on your loan. Yield Spread Premium is a percentage of your loan amount paid by the lender when the mortgage broker locks and closes your home loan with a higher than necessary mortgage rate. I say “higher than necessary” because the mortgage broker is already being compensated for their work with the origination fee you’re paying. Any amount of Yield Spread Premium on your loan could effectively double or triple the broker’s compensation on your loan.

Best Mortgage Rate 2009

In order to get the best mortgage rate when refinancing your mortgage you’ll need to avoid Yield Spread Premium completely. This unnecessary markup of your mortgage rate can add hundreds of dollars to your monthly payment, and for what reason? Just to give your mortgage broker a bonus to make their boat payment? Not on my watch…the free videos on this website will show you not only how to avoid Yield Spread Premium and lender junk fees responsible for homeowners in the United States overpaying nearly sixteen billion dollars every year according to the government.

Check out my Underground Mortgage Videos today and you’ll get immediate online access to the mortgage tutorial in my password protected memberhip area and a list of mortgage brokers in your area that do not pad their loans with Yield Spread Premium.

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Par Mortgage Rates Definition

Robert — Thu, 01 Jan 2009 21:11:01 +0000

If you are considering refinancing your existing home mortgage loan a par mortgage rate could save you thousands of dollars every year that you have the mortgage. The problem is that all of the mortgage rate quotes you see online and from your local mortgage companies include some markup to create a commission for the loan originator.

Here are the basics you need to know about par mortgage rates to help you get the lowest rate and monthly payment when refinancing your mortgage loan.

A “Par” mortgage rate is one that does not cost money to get or creates cash for the mortgage broker as a commission.

Mortgage rate sheets used by your Mortgage Company or broker are listed on a scale. Going from one side of the rate sheet to the other, the lower the mortgage rate the more you’ll need to pay in “discount points” to get that lower rate. As you move further along the scale there is a point where no points are required. This point on the rate sheet is a “par mortgage rate.” Move further along the rate sheet and you’ll see that mortgage rates higher than “par” creates cash commission in the form of Yield Spread Premium.

Here’s an example to illustrate how mortgage rate sheets quote an interest rate:

5.75% (.5 point required) 5.875% (.25 point required)
6.0% (zero points) Par Mortgage Rate
6.125% (.25% commission created) 6.25% (.5% commission created)

As you can see, 6% is the par mortgage rate of the day. Mortgage rates above 6% create cash for the Mortgage Company or broker while rates below 6% cost you money in the form of discount points. If you want the lowest possible mortgage rate when refinancing you’ll need to get as close to par as possible without creating Yield Spread Premium for the mortgage broker.

How do you get a par mortgage rate? You can get a par mortgage rate by paying a flat 1% origination fee to the person arranging your mortgage loan. Doing this is easier than you think; you just need to find the right mortgage broker for the job.

The free mortgage refinancing videos on this website show you how to get a par mortgage rate while avoiding lender junk fees in the process. Register today and you’ll be on your way to saving thousands of dollars every year on your next mortgage loan.

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How to Shop for a Mortgage Broker When Refinancing

Robert — Thu, 21 Feb 2008 22:04:44 +0000

Most homeowners know very little about how mortgage brokers are compensated for their work.

They assume that the origination fee listed on their Good Faith Estimate is the broker’s commission for the home loan; however, what you don’t know about mortgage broker fees could cost you a lot of money.

Here are several tips and questions to ask potential brokers to help you find the right professional to refinance your home loan.

The mortgage industry in the United States has a dirty little secret known as Yield Spread Premium. Mortgage brokers are very good at explaining away this fee as “lender paid” compensation; in other words it’s not coming out of your pocket so don’t worry about it. The problem with Yield Spread Premium, which is a percentage of your loan amount created when the broker locks and closes your home loan with an above market interest rate, is that it really is costing you money…thousands of dollars in unnecessary finance charges every year that you’ll pay as long as you keep that loan

Yield Spread Premium is a Lie

Your mortgage broker pockets a commission from the lender for marking up your mortgage interest rate. Sure this is listed on the HUD-1 statement as a “broker rebate” but if your broker doesn’t tell you they’ve marked up your interest rate for cash it’s still a lie of omission. Your mortgage broker receives one percent of your loan amount for every quarter percent they overcharge you. This “rebate” is paid in addition to any origination fees or mortgage broker fees you’re already paying.

Mortgage Refinancing Done Right

Another problem faced by the majority of homeowners refinancing their mortgages is that they don’t know what a good deal looks like. The ideal transaction between a homeowner and a mortgage broker is a loan with zero Yield Spread Premium, no garbage fees, and a one percent origination fee. Think that this sounds too good to be true? It’s not if you know how to find the right mortgage broker to originate your loan.

Questions to Ask Your Mortgage Broker

Before you agree to anything with a mortgage broker there are several pointed questions you need to be asking:

1. Are you the owner of your company? (it’s always easier to negotiate with a mortgage broker who is self employed and runs their own business)

2. How long have you been originating mortgages? (ten years or longer)

3. What is your closing percentage? (you want 90% or better)

4. What is your percentage of compensation including Yield Spread Premium?

5. Will you originate my loan yourself? (looking for a yes here)

6. Will you accept a one percent origination fee without Yield Spread Premium? (this is a deal breaker, if the answer is no, move on to the next broker)

7. Will you provide me the wholesale lender’s lock confirmation when I decide to lock my mortgage rate? (another deal breaker…needs to be yes)

Honest mortgage brokers willing to work for a one point origination fee do exist and finding a broker like this will save you thousands of dollars and countless headaches when refinancing your home. You can learn more about getting a wholesale mortgage rate while avoiding lender junk fees by registering for my free mortgage video tutorial.

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Refinancing Home Loan

Robert — Wed, 06 Feb 2008 23:50:20 +0000

When the Federal Reserve lowers short term interest rates mortgage refinancing becomes a hot topic for many homeowners. If you are considering refinancing your mortgage but are concerned about paying too much there are several things you need to know about shopping for a new home loan. Here are several tips to help you refinance your home loan without paying garbage fees or unnecessary markup of your mortgage rate.

Banks vs. Mortgage Brokers

The first thing you need to know is that you should never take out a mortgage from a bank or broker bank. Banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose their profit margins or markup of your mortgage rate. If you refinance your home loan with a bank you’ll never get a wholesale mortgage rate or anything close to it. The same is true of broker banks.

What’s a broker bank? This is basically a mortgage company or broker operating as a bank. Many mortgage companies and brokers changed their businesses when the law changed in order to take advantage of the same loopholes as banks. The only way to recognize if your mortgage company or broker is acting as a broker bank is to ask if they close on the mortgage in the name of the company or the wholesale lender. If the answer you get is that they close in their own company’s name you are dealing broker bank and cannot refinance with wholesale rates.

Mortgage Broker Secrets

The biggest secret your mortgage broker is keeping from you is called Yield Spread Premium. This is the industry term for the commission your mortgage broker receives for marking up your mortgage interest rate. Brokers do this because lenders pay one percent of you loan amount for every .25 percent they overcharge you…something they do without telling you. There are ways to recognize this markup of your mortgage rate, and it is possible to avoid paying it when refinancing.

How to Recognize Yield Spread Premium

Your first opportunity to spot Yield Spread premium is on the Good Faith Estimate; however, many brokers intentionally omit it from this document. If you can get your hands on the rate lock confirmation from the lender, Yield Spread Premium is clearly disclosed; however, many brokers falsify rate lock confirmation to omit this markup. The last chance you’ll have to spot this markup is on the HUD-1 statement. If Yield Spread Premium is included with your loan it will be listed on lines 810 or 811 of this document. You may see it called a “broker rebate” or YSP paid to broker but this dollar amount is the kickback your broker receives for overcharging you.

Yield Spread Premium Can Be Avoided

Homeowners who learn to recognize Yield Spread Premium can negotiate with potential mortgage brokers to avoid paying it. You can learn more about refinancing your home loan without paying too much by registering for our free mortgage tutorial.

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Mortgage Refinancing During The Holidays

Robert — Mon, 26 Nov 2007 22:14:47 +0000

Many homeowners wonder if taking out a new mortgage during the holidays is a good idea. If you’re considering refinancing this holiday season, there are a number of very good opportunities available for savvy homeowners. Here are several tips to help you make an informed decision if refinancing this holiday season is right for you.

Mortgage Rates This Holiday Season

Despite the credit crunch in the United States wholesale mortgage rates are currently hovering at 5.875% for a 30 year, fixed rate mortgage. This is an excellent opportunity to refinance if you are still paying on a higher rate mortgage loan. Keep in mind that this is a wholesale mortgage rate and the rate quoted by your mortgage broker will include Yield Spread Premium. Your goal when taking out a mortgage is to avoid paying this unnecessary and controversial markup.

Reasons For Refinancing Your Mortgage

The most common reason for refinancing during the holidays is to borrow cash against the equity in your home. While borrowing cash for the holidays might not be the best use of your home’s equity, it is after all your equity. You can use the cash you get back at closing for any reason that you see fit. Other reasons for refinancing include consolidating your first and second mortgages to get one monthly payment and consolidating your higher interest credit card debt.

Refinancing With a Wholesale Mortgage Rate

Homeowners who avoid the unnecessary retail markup of their mortgage rate can save thousands of dollars in finance charges. Avoiding this markup known as Yield Spread Premium is easier than you think; the hardest part is learning how to recognize it in your loan documents. The Annual Percentage Rate provided by the lender tells you nothing about Yield Spread Premium and many brokers conveniently leave this fee off the Good Faith Estimate.

How can you find out if your loan includes Yield Spread Premium? Ask your mortgage broker to see the rate sheet from the wholesale lender behind your loan. Don’t accept a rate sheet printed on your mortgage broker’s company letterhead, it needs to come from the wholesale lender. Tell your mortgage broker that you understand Yield Spread Premium and will not consider loan offers that include lender paid fees.

Beware Garbage Fees

In addition to avoiding Yield Spread Premium when refinancing there are a number of garbage fees you need to be aware of. Carefully review your Good Faith Estimate for any fee that resembles an application fee, rate lock fee, broker courier fee, or loan processing fee. These are garbage fees added by your mortgage broker that have absolutely nothing to do with lender approving your loan. If you find fees like this on your Good Faith Estimate you should call your mortgage broker out and negotiate to have them removed or pay a lesser amount.

Reconciling Your Good Faith Estimate

The Good Faith Estimate you receive is one of the least understood mortgage documents. When your mortgage company or broker quotes you an interest rate they typically provide you a copy of the Good Faith Estimate. This document estimates your closing costs and fees for obtaining the loan. The Good Faith Estimate you receive is only as good to you as the person preparing it is honest. In many cases mortgage brokers fabricate these documents so you’ll commit to the loan. Once this happens you can be sure that bait and switch will get you more expensive loan.

You can avoid this by reconciling your Good Faith Estimate with the HUD-1 statement before signing the loan contract. While the Good Faith Estimate is supposed to approximate your costs, the HUD-1 is the final list of what these fees actually are. Never sign your loan contract without reconciling your Good Faith Estimate against the HUD-1. If you find any discrepancies whatsoever you should have a heart-to-heart discussion with your mortgage broker before you sign anything.

You can learn more about refinancing your mortgage without paying garbage fees and retail markup of your mortgage rate by registering for a free Mortgage DVD.

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Mortgage Refinancing During the Holidays

Minimizing Mortgage Refinancing Risks

Robert — Tue, 06 Nov 2007 22:06:32 +0000

Mortgage refinancing offers many advantages and potential savings; however, there are a number of risks and expenses that you should keep in mind. If you are refinancing because your existing mortgage has an adjustable interest rate you can minimize your risks by choosing a mortgage with a fixed interest rate; however, anytime you take out a new mortgage you run the risk of overpaying for the new loan. Here are several tips to help you protect yourself from lender abuses when refinancing your mortgage.

The main objective for many homeowners when refinancing is to obtain a loan with a lower mortgage rate and better terms. A lower monthly payment isn’t the objective for every homeowner; some people refinance their mortgages with a higher monthly payment in order to pay down their mortgages more quickly. Regardless of your objective for the new mortgage there are steps you can take to ensure your mortgage broker and lender are not taking advantage of you when refinancing.

One of the risks you encounter when refinancing your mortgage is the markup your broker adds to your interest rate to get a commission from the lender. This markup of your mortgage interest rate is called Yield Spread Premium and according to the Department of Housing and Urban Development is responsible for homeowners in the United States overpaying billions of dollars each year.

Yield Spread Premium can be avoided when refinancing your mortgage. You’ll be required to pay an origination fee for your mortgage broker’s services; a reasonable amount to pay for refinancing your mortgage is one percent of the loan amount. Because you’re paying this fee any commission from the lender is not only completely unnecessary but is taking advantage of you. Talk to potential mortgage brokers before entering an agreement and explain that you understand how Yield Spread Premium works and will not tolerate this unnecessary markup with refinancing.

There are other risks from hidden fees and penalties when refinancing your mortgage. Make sure your existing mortgage does not include a prepayment penalty; lenders frequently include hefty penalties to discourage their borrowers from refinancing the loan. These penalties are unnecessary and can be as high as six months of interest on your original loan balance. If you’re unsure whether or not your existing mortgage includes a prepayment penalty contact your lender prior to applying for a new loan.

You can learn more about minimizing your risks when refinancing and other costly pitfalls to avoid with a free six-part video tutorial. The videos walk you through the entire process of refinancing without paying too much and are broken up into the following sections:

Part One: Mortgage Refinancing Introduction

Part Two: Refinancing in the Mortgage Marketplace

Part Three: How Your Credit Affects Your Mortgage

Part Four: Dirty Little Mortgage Secrets You Need to Know

Part Five: Refinancing Your Mortgage on the Internet

Part Six: Refinancing Your Mortgage Step-by-Step

These videos are yours free with no cost or obligation. Get your copy today; it’s fast, easy and free. Click Here to Register Now.

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The Sky Is Not Falling…Yet

Robert — Thu, 23 Aug 2007 22:46:35 +0000

Unless you’ve been living under a rock you’ve probably heard about the recent credit crisis in the United States. Spurned by the collapse of the sub-prime or bad credit mortgage industry, and depending on which news channel you’ve been watching, you might have heard that there is no money for mortgage loans, that credit card companies are cutting people off, and oh yes…forget about that car loan. While it’s true that the sub-prime mortgage industry has imploded and that bad credit lenders are filing for bankruptcy right and left, regrettably laying people off, the homeowners affected by this crisis are mainly those with poor credit.

You may have also heard that European investors downgraded the credit ratings of US mortgage companies making it more difficult for these companies to fund their loans. Again, the companies affected here are sub-prime mortgage lenders. While it’s true that Europeans perceive Americans as fat, stupid, gun-toting criminals that don’t pay their bills (just ask Jeremy Clarkson, host of Top Gear…he’ll tell you) the majority of what you’re hearing in the news can be attributed to these sub-prime mortgage lenders that you see dropping like flies. Americans are certainly not stupid and most of us do pay our bills on time. As for the rest…well, I digress.

The mortgage industry is still alive and kicking in the United States; if you are a homeowner with good credit in need of a mortgage you can find the funding you need. Mortgage lenders as a rule are greedy bastards, so you can expect to see them exploit this “crisis” to make a buck. Headline News reported this morning that mortgage lenders are raising interest rates and imposing “strict” loan terms to “keep pace with the current economic environment.” This is corporate speak for taking advantage of people to make a buck.

This “credit crisis” or shall we say excuse for raising mortgage rates and imposing unfavorable loan terms on the hard-working American homeowner, is why doing your homework and comparison shopping is critical if you are in the market for a new loan or to refinance your existing mortgage. Again, if you have poor credit or a jumbo mortgage you’ll probably have to wait for blue skies to come again; however, if you have good credit and a chunk of equity in your home, refinancing with good rates and loan conditions is still possible.

Yield Spread Premium hasn’t gone away and lenders will still try and sell you an outrageous mortgage to improve their bottom line. This can be avoided by learning how to recognize their greedy bag of tricks, starting with the unnecessary markup of your mortgage interest rate. You can learn more about refinancing your mortgage without being taken advantage of with my video toolkit. For free access to the videos, training materials, and support staff click on the DVD image you see at the top of this page. There is no obligation to you now or in the future…really, no strings attached.

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What The Heck Does Annual Percentage Rate Mean Anyway?

Robert Regehr — Mon, 13 Aug 2007 17:28:54 +0000

Refinancing your home mortgage loan can be an overwhelming experience for many people. New homeowners are bombarded with acronyms and jargon like APR, ARM, GFE…at times it can be too much to handle. Today I’m going to talk about the Annual Percentage Rate (APR) and the best way to comparison shop mortgage offers when refinancing.

There are many misconceptions and bad advice surrounding Annual Percentage Rate. Many people, including some financial advisors, will tell you that using the APR is the best way to compare mortgage offers when refinancing. While it’s true that Federal Truth in Lending Laws in the United States require mortgage lenders to publish a figure called “Annual Percentage Rate,” there are no standards that lenders are held to when calculating this figure.

So What is Annual Percentage Rate?

APR is a rate of interest expressed as an annual percentage that is supposed to tell you at a glance the costs of borrowing with a particular loan. The intent was to keep lenders honest when advertising their ultra-low teaser rates. Unfortunately, the Truth in Lending Law failed to protect homeowners from abusive lending practices.

The biggest problem with Annual Percentage Rate is that every lender calculates the figure differently and there are no standards lenders are required to follow when disclosing their fees. While it’s true this isn’t the lender’s fault, they certainly use this flaw in disclosure laws to their advantage. Because every lender calculates their APRs differently, relying on this figure to compare loan offers is like comparing apples to oranges and will not tell you which loan is the better deal.

How Do You Shop for a Mortgage if the APR is Useless?

There are several ways to compare loan offers before committing to a mortgage lender. One thing you need to understand about shopping for a mortgage is that you’re relying on honesty of a stranger. Shopping for a mortgage loan is a lot like shopping for a used car. Your salesperson wants you to pay as much as possible for the car because their commission depends on it. The same is true for mortgage brokers, and as you might know from stories in the news or personal experience, mortgage brokers do not have a reputation for being honest people.

There are two documents that you will encounter when refinancing your mortgage that will help you choose a lender. The first is the Good Faith Estimate (GFE). While Good Faith Estimates are flawed like the Annual Percentage Rate and are only as good as your broker is honest, they give you an itemized list of charges you can use to make a comparison. Mortgage lenders are required by law to provide you with a Good Faith Estimate upon receipt of your application; however, most will give it to you in advance if you ask politely.

The Good Faith Estimate leaves much to be desired and many originators omit or misrepresent charges to make their loan offers more attractive. You can keep this person honest using the HUD-1 statement before you sign your loan contract. You should receive the HUD statement at least 24 hours prior to closing. Your mortgage lender is required to disclose everything on this document and if the charges do not come close to what you received on the Good Faith Estimate you’ll need to have a heart-to-heart discussion with the person originating your loan before taking your business elsewhere.

You can learn more about comparison shopping for the perfect mortgage when with my free mortgage refinancing video tutorial. The videos and tools are yours free with no obligation now or in the future.

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Mortgage Refinancing Tips

Robert — Thu, 02 Aug 2007 18:52:44 +0000

If you are in the market to refinance your mortgage there are several expensive pitfall you’ll want to avoid. Mortgage refinancing can save you thousands of dollars if you go about it the right way. Here are several tips to help you refinance your mortgage without paying too much to your broker or lender. Finding the right lender makes the difference between getting a great mortgage loan and making an expensive mistake. There are several types of lenders you can choose from when refinancing. You have the option of refinancing your mortgage with your bank or credit union, a mortgage broker, internet lender, or a broker-bank.

Types of Mortgage Lenders

Each type of mortgage lender has advantages and disadvantages. Refinancing your mortgage with a bank or credit union can be a fast and convenient method of securing a new mortgage; however, if you refinance with your bank you’re guaranteed to overpay for that loan. The reason for this is that your bank is exempt from the Real Estate Settlement Procedures Act; this legislation protects homeowners in the United States from abusive lending practices by requiring lenders to disclose their markup and profit margin on your loan.

The Banking Lobby spent millions of dollars ensuring that your Bank doesn’t have to play by the rules. Banks routinely markup mortgage interest rates to boost their profits when the loan is sold to investors on the secondary market. This markup of your mortgage interest rate is called Service Release Premium and because the bank is exempt from the Real Estate Settlement Procedures Act, the bank is the only one that will ever know how much you’re being overcharged.

Never refinance your home mortgage with a bank or a broker-bank. Broker-banks are simply banks pretending to be mortgage brokers. How can you tell if the company you’re considering for mortgage refinancing is really a bank or broker-bank? Ask your loan representative if they close in the name of their own company or the name of the wholesale lender. If the answer is that your mortgage is closed in the broker or mortgage company’s name you’re actually dealing with a bank pretending to be a mortgage broker.

Refinancing With a Mortgage Broker

Mortgage brokers have the advantage of accessing wholesale interest rates for their customers. The problem with refinancing your mortgage with a mortgage broker is that these individuals are paid by commission and the more they mark up that wholesale interest rate the higher their commission will be. The difference between the wholesale mortgage rate your lender approves you and the rate you close with is called Yield Spread Premium.

Avoid Yield Spread Premium and Get a Wholesale Mortgage Rate

Homeowners who learn to recognize the unnecessary markup of their mortgage interest rate can refinance with wholesale rates and save thousands of dollars. This is true if you are refinancing with a local mortgage broker or one you contact on the Internet. Because you’re already paying a perfectly reasonable origination fee for the broker services, any amount of Yield Spread Premium charged by the broker is not only unnecessary but is completely taking advantage of you.

Be Careful With Internet Mortgage Sites

You might be tempted to visit one of the big mortgage sites you see advertising on television like Lending Tree. Many homeowners are surprised to discover that sites like Lending Tree have absolutely nothing to do with mortgages and make money by selling leads to lenders and brokers. While there’s nothing wrong with sites involved with lead generation, RefiAdvisor for example is funded by lead generation, sites like Lending Tree take advantage of their users by charging them a ridiculous “Computerized Loan Origination Fee.”

If you visit Lending Tree’s website and click on their “Licenses & Disclosure Statement” you’ll find that lending tree receives a fee of up to $1,300 for their part in “arranging” your loan. This fee appears on your Good Faith Estimate and you’ll be required to pay it when closing on your loan. What does lending tree do for $1,300? Aside from collecting your personal information and selling it to the highest bidders in their network, Lending Tree does absolutely nothing.

You can learn more mortgage refinancing tips to help save you money and avoid being taken advantage of by your lender with my free mortgage toolkit. You can get started today free with no obligation by registering using the link at the top of this page.

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