Mortgage Refinance Guide

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:

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.

If you are in the process of taking out a mortgage to purchase your home or refinance an existing mortgage, doing your homework can save you thousands of dollars by avoiding expensive pitfalls in the loan process. If you’re looking for mortgage loan assistance for your new loan the free videos on this website can help you find a mortgage with a wholesale interest rate. Here are the basics you need to know to avoid being ripped off with your next mortgage loan.

What is a Wholesale Mortgage Rate?

Mortgage rates come in two varieties. There are wholesale rates which are typically not offered to members of the public and the retail mortgage rates offered by mortgage companies, internet sites, and mortgage brokers. If wholesale rates are not offered to the public, how do you go about getting one? In order to get a wholesale mortgage rate for loan you’ll need to enlist the help of a mortgage broker and understand how this person is compensated. Mortgage brokers have access to wholesale rates directly from the lenders. Your broker typically marks up this rate to get a commission from the lender; most often without telling you.

Why Mortgage Brokers Inflate Interest Rates

When a mortgage broker quotes you an interest rate the quote you are getting is for a retail mortgage rate. Yield Spread Premium is the markup your mortgage broker adds to your rate to get a commission from the wholesale lender behind your loan. The problem with this markup is that you are already paying for the broker’s services with an origination fee. Agreeing to a mortgage that includes Yield Spread Premium will double, even triple the compensation that your mortgage broker receives unnecessarily.

Mortgage Loan Assistance

The best advice I can give you about your mortgage is to avoid paying Yield Spread Premium on your loan. The origination fee you pay is more than ample compensation for the broker’s work. Some brokers try and justify Yield Spread Premium by saying that you’d have to pay more points on the loan if the fee wasn’t being paid; however, this is simply not true. Yield Spread Premium exists as an incentive for mortgage brokers to overcharge you and anyone that tells you differently is only thinking about their wallet.

Mortgage Refinancing Video Tutorial

The free videos available from this website walk you through the entire process of taking out a new purchase mortgage or refinancing your existing loan. Topics covered include understand how the mortgage markets work, improving your credit before applying, mortgage rate secrets, and a step-guide-step guide to comparison shopping, applying, and closing on the loan. Register for the videos today, access is free with no obligation.