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How to Negotiate With Your Mortgage Broker

March 27th, 2007

Mortgage Brokers can be an excellent resource for mortgage refinancing if you find the right broker to work with. Before entering into an agreement with a broker there are several important questions you need to have answered.

The first thing you need to make clear to any potential mortgage broker is that you fully understand how Yield Spread Premium works, know how to find it in your mortgage, and simply won’t stand for it in your mortgage interest rate. If you’re new to RefiAdvisor, this site focuses on educating homeowners about the hidden markup of their mortgage interest rate that serves only to boost the commission of the individual that originated the loan.

In a nutshell, when your loan application was approved, you qualified for a specific mortgage interest rate. Your loan officer marked this rate up because the wholesale lender pays them a bonus of one percent of your mortgage amount for every quarter percent they mark up the mortgage rate. The difference between the mortgage rate you qualified and the rate you locked and closed is Yield Spread premium.

When negotiating with potential mortgage brokers the first thing you want to tell them is that you will not accept a mortgage that includes Yield Spread Premium. Tell the broker you will pay a reasonable origination fee for their services. A reasonable origination fee is 1% of your loan amount. Ask the broker to see the Good Faith Estimate before submitting your application and the rate lock from the wholesale lender once your application is accepted. You will be able to spot any Yield Spread Premium on the lock confirmation from the wholesale lender.

An honest mortgage broker will agree to these terms and you will save yourself thousands of dollars and many headaches. Lastly, when you negotiate with potential mortgage brokers try and deal with the owner of the firm in question. Loan representatives may not be able to broker a deal with these terms so it’s best to start from the top. You can learn more about refinancing your mortgage without overpaying with my free video tutorial.

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Mortgage Broker Good Faith Estimate

January 10th, 2007

If you are considering applying for your home loan with a broker, Mortgage Broker Good Faith Estimates are an excellent way to comparison shop for the best loan. Brokers are required to provide you the Mortgage Broker Good Faith Estimate within three days of receiving your application; however, most brokers will provide a copy if you ask for it. Requesting the Mortgage Broker Good Faith Estimate before submitting your application allows you to compare loan offers with more information provided by the Annual Percentage Rate.

When you receive the Mortgage Broker Good Faith estimate for loans you are considering, there are several items you need to check to avoid overpaying for your loan. First, check the origination or broker fee for your loan. This origination fee should not be higher than 1-1.5% of your mortgage amount for a home you will live in and 2-2.5% for any investment properties you own.

The next item you need to locate on your Mortgage Broker Good Faith Estimate is the loan processing fee. This fee is often paid to a third party company for processing; however, this fee should not be higher than $400. If your mortgage broker fee or processing fee is higher than these amounts you should question your mortgage broker as to why the fees are so high.

Finally, tell your mortgage broker that you will not pay retail markup of your mortgage interest rate. This markup by the mortgage broker is called Yield Spread Premium and will result in paying thousands of dollars in unnecessary mortgage interest. How can you tell if your Mortgage Broker Good Faith Estimate includes Yield Spread Premium? Ask your mortgage broker to see the rate lock from the wholesale lender and compare it to the interest rate found on your Mortgage Broker Good Faith Estimate along with the interest rate guarantee you received. If your mortgage interest rate is higher than the rate on the wholesale lender’s lock sheet, you know the mortgage broker has marked up your interest rate.

You can learn more strategies for comparing you Mortgage Broker Good Faith Estimate by registering for our free, six part mortgage tutorial.