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

Typical Loan Origination Fee

Robert — Wed, 08 Jul 2009 20:48:35 +0000

If you’re in the process of taking out a new home mortgage loan you might have questions pertaining to loan origination fees. What is a typical loan origination fee and what about mortgage brokers that claim the lender is paying this fee for you? There are no free lunches when it comes to mortgages and loans with “no origination fees” always come with a catch. Here is what you need to know about the typical loan origination fee in order to avoid paying too much for your next home mortgage loan.

Your Typical Loan Origination Fee

What’s a fair amount to pay for mortgage loan origination? First of all, you should understand what the loan origination fees are for. Your mortgage broker or loan company charges you a fee for their part in arranging your home loan known as a loan origination fee. Typical loan origination fees vary by broker and mortgage company; however, a one percent origination fee is a reasonable amount to pay for arranging your home loan. Many mortgage companies and brokers overcharge loan origination fees so you’ll want to comparison shop until you find someone willing to work for a flat one percent.

What About Hidden Origination Fees?

There is a hidden fee you need to know about before taking out a mortgage loan. Many mortgage companies charge you an origination fee, (often overcharging you) and then take a hidden fee paid by the lender on top of it. This hidden fee drives up your mortgage payment unnecessarily and often doubles even triples the compensation your broker receives for their work. You get stuck paying as much as a hundred dollars or more per month more than you need to and the broker doubles their take at your expense.

What is this hidden fee the Secretary of Housing and Urban Development blames for overcharging homeowners in the United States to the tune of sixteen billion dollars this year alone? I am of course talking about Yield Spread Premium. Don’t worry if you’ve never heard of Yield Spread Premium (YSP) as most homeowners have not.

The simplest definition of Yield Spread Premium is a fee paid by mortgage lenders for home loans that are locked and closed with higher than necessary mortgage rates. Your mortgage lender approves you for a specific mortgage rate based on your credit and financial details; however, the mortgage company or broker almost always quotes you a much higher rate to get this extra commission from the lender. As a result your mortgage payment is much higher than it need be and the reason most people overpay for their mortgage loans.

If you want the lowest possible mortgage rate for your home you’ll need to avoid this unnecessary markup for a hidden origination fee. You don’t have to be a financial guru to find someone willing to work for a one percent loan origination fee without including Yield Spread Premium on your mortgage; you simply need to find the right person for the job.

You can learn more about Loan Origination Fees and other mortgage junk fees that result in overpaying thousands of dollars for your next mortgage by checking out my free Underground Mortgage Refinancing Videos. Here’s a sample of what you’ll get when you register:

Sign up today, these mortgage videos are yours free with no obligation.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Bad Credit Mortgage Interest Rate

Robert — Sun, 17 May 2009 01:42:26 +0000

If you’ve been thinking about refinancing your home mortgage loan but don’t think you’ll be able to take advantage of today’s low rates because of your credit, you might be surprised to learn how accessible low mortgage rates are.

While your credit score plays a factor in qualifying for a mortgage loan, getting the lowest mortgage rate and payment depends not on your credit history but how much about mortgage loans you know.

It’s true… learn the ropes and you’ll find that you qualify for a better mortgage rate than that snobbish neighbor on your block with their perfect credit rating. Here’s what you need to know in order to refinance your mortgage getting the lowest possible payment with less than ideal credit.

Just How Bad is Bad Credit?

There are limitations of course to how bad your credit can be in order to qualify for a traditional mortgage loan; assuming your credit score is not a barrier to loan approval your actual credit score is a non-issue. It doesn’t matter if your credit score is 650 or 750, once you’re approved your credit score has nothing to do with the mortgage rate you receive. What should you do if you cannot qualify for a traditional mortgage loan because of your credit? There are lenders that specialize in this type of home loan; even if you are unable to qualify for a traditional mortgage loan the strategies taught on this website can still save you thousands of dollars. What you need to know is that responsibility for setting your mortgage rate does not lie with the lender. So, if the mortgage lender doesn’t set your interest rate upon loan approval, who does?

Mortgage Interest Rates 101

It might surprise you to learn that the person responsible for determining your mortgage interest rate and ultimately whether or not you get a good deal or overpay is none other than your old friend the mortgage broker. You see, mortgage brokers work from daily lender rate sheets. These mortgage rate sheets quote interest rates for the same loans, with and without points. Keep in mind that a point is a fee you’ll pay to qualify for a specific mortgage rate and not all mortgage rates require paying points. In fact, some mortgage rate quotes actually create points for the broker, which is something you’ll want to avoid when refinancing. Remember that one point is 1.0% of your loan amount and the sweet spot that you’re looking for with your new mortgage is an interest rate that does not require cash out of your pocket or creates an “extra” commission for the person arranging your home loan.

The mortgage rate you’ll receive when refinancing your home loan depends on how well you can negotiate when shopping for the right person to arrange the mortgage. Negotiation not your thing? Don’t worry… it’s a lot easier than you think as long as you’re upfront with the mortgage brokers you contact. I’ve put together a very simple screening process you’ll learn about shortly to weed out mortgage brokers that take lender kickbacks and charge you junk fees.

If you take one thing away from this article in needs to be that the mortgage rate you qualify for has little to do with your credit score and is determined by the person you choose to arrange your home loan…

Because the person you choose to arrange your mortgage is paid by commission you can bet the home loan that gets them the biggest commission is not going to be the right home loan for your situation. So how does this commission I’m talking about affect your mortgage rate? Remember that I told you that lender rate sheets quote mortgage rates that either require or create points? The sweet spot in the middle is the mortgage rate that neither costs nor creates points for the broker. When you pay points in exchange for a lower mortgage rate the fee you’re paying is called a “discount point.” Conversely, when you unknowingly accept a higher than necessary mortgage rate when refinancing, points are created for the broker in the form of an unnecessary commission known as Yield Spread Premium.

Notice that I said “higher than necessary” mortgage rate creating an “unnecessary” commission for the broker. This isn’t to say that the mortgage broker should not be paid for their work; on the contrary, this is what the loan origination fee is for. The problem is that many mortgage brokers feel they are entitled not only to your origination fee, but also to Yield Spread Premium on the loan driving up your mortgage payment unnecessarily. (By the way you shouldn’t pay more than one percent for the loan origination fee.)

Shouldn’t You Just Avoid Refinancing With a Mortgage Broker?

At this point you might be saying to yourself “I already knew that mortgage brokers are shady… I’ll just avoid all this crap and refinance with my bank.” It makes sense right? Banks are direct lenders… refinance with a direct lender and you not only cut out the middleman but their commission also. The problem is that not only does your bank and every other “direct lender” under the sun take the same markup of your mortgage rate but thanks to a convenient loophole in disclosure laws your bank is not required to disclose their markup or profit margin on your loan. Banks simply do not give their customers par mortgage rates… ever. You cannot avoid working with a mortgage broker if you want the lowest possible rate and payment, bad credit or not.

It is possible to refinance your home with a par mortgage rate without a stellar credit rating and you don’t have to be a financial guru to pull it off. You can refinance your home without paying points or Yield Spread Premium on the loan, get the lowest payment and look like a hero to your family. All you need to do is find the right mortgage broker for the job.

You can learn more about a bad credit mortgage interest rate and refinancing your home loan without paying points or mortgage junk fees by registering for my Underground Mortgage Videos. Register today and you’ll get immediate access to the mortgage videos online without downloading anything to your computer. Here’s a sample of what you’ll get when you register… The refinancing techniques in these free mortgage videos save the average homeowner $1000 per year.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Mortgage Annual Percentage Rate

Robert — Wed, 18 Feb 2009 22:17:08 +0000

Are you in the market to refinance your existing mortgage loan? Do you find terms like APR, Mortgage Rate, and Points confusing and misleading?

You’re not alone…most homeowners never fully understand what the Annual Percentage Rate is or how points affect their mortgage rate and closing costs. Here are several tips to help demystify mortgage loans and save you thousands of dollars when refinancing your home loan.

Annual Percentage Rate

You’ll see it listed as APR for short…but what is Annual Percentage Rate really? The Truth in Lending Act of 1974 requires lenders to disclose the costs of a loan to allow homeowners to compare loan offers. This law was supposed to make it easy to make apples to apples comparisons of any mortgage offer you’re considering; however, the problem you’ll find when comparing one apple to another is that your lender could just as easily hand you a mango that they’ve designated an apple. Here’s why.

Annual Percentage Rate is an expression of the total costs you’ll pay every year as a percentage of the loan amount. The law requires mortgage lenders to tell you what the APR is; however, there is no standard for lenders to calculate the APR or requirements that all fees and charges be listed. This means that every lender you encounter when refinancing your mortgage will have a different way of calculating the APR and may only include the lenders fees, not your broker’s origination fees and markup.

APR is a Marketing Tool

These days the Annual Percentage Rate is largely a marketing tool designed to get you into the office or on the phone to generate a lead. Most of the numbers you see are purely fictional and should not be relied on when choosing a mortgage loan. How should you compare loan offers? Shopping for a mortgage correctly isn’t a matter of comparing loan offers like you would compare a bottle of Ketchup at the grocery store. Instead of trying to find the right lender or loan, concentrate your efforts on finding the right person to arrange you mortgage and the rest will fall into place.

How to Find the Right Mortgage Broker

Finding the right mortgage broker when refinancing your home loan is easier than you think. If you look in the phone book you’ll find a lot of fancy mortgage brokers with posh offices and company hummers decked out with their company logos. Think these folks are the right people to originate your loan? Think again. Posh offices, expensive sales staff, receptionists, cappuccino makers, and company hummers cost a lot of money. These mortgage brokers have huge overhead costs to keep their businesses afloat and have minimum targets they need to bring in on each loan.

This means because of their overhead costs these mortgage brokers will never be willing or able to negotiate their origination fees or Yield Spread Premium on your loan. It’s your money but these broker’s think they’re entitled to it…someone’s gotta make that hummer payment right?

How do you find the right mortgage broker to refinance your home loan? Look for a small, self-employed mortgage broker that has been in the business for ten years or longer. Does this broker work out of their home? Even better…less overhead means these mortgage brokers will be willing and able to negotiate for your business.

You can learn more about finding the right broker to refinance your home loan without paying commission based markup of your mortgage rate or junk fees by registering for my Underground Mortgage Videos available on this website.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Refi Problems You Need to Avoid

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

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

Refi Problems

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

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

Mortgage Yield Spread Premium

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

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

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

Yield Spread Premium Can Be Avoided

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

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Refinance Fees

Robert — Sun, 25 Jan 2009 19:37:34 +0000

If you are in the process of refinancing your home mortgage and don’t want to overpay refinance fees when taking out a new loan, there are many junk fees you’ll need to avoid to ensure that you’re getting a good deal.

Most of the junk fees you’ll encounter when mortgage refinancing are from the person originating your loan and can be avoided if you know how. Here are several tips to insure you’re not overpaying refinance fees on your next mortgage loan.

Mortgage Loan Origination

What is mortgage loan origination anyhow? Can’t you just go to your bank or credit union and cut out the middleman when refinancing to get the best deal? You could go to your bank to refinance; however, because of a little known loophole in the Real Estate Settlement Procedures Act the bank can charge you the same fees you’ll pay with a mortgage broker and doesn’t even have to disclose them to you. That’s right, banks are the worst deal in mortgage loans thanks to the Banking Lobby which spent millions of dollars lobbying congress to be exempt from disclosure laws that protect homeowners from predatory lending practices.

Mortgage Broker Fees

Since banks are out of the picture due to unfair lending practices, the best option for your next mortgage loan is use a mortgage broker to arrange your loan for you. You don’t want just any mortgage broker since dishonest brokers pad their commissions with junk fees and mortgage rate markup; you’ll need to find an honest broke willing to work for a one percent origination fee…more on this later.

The first thing you need to know about refinance fees is that mortgage loans are retail products. The person arranging your loan is simply reselling loans from a wholesale lender for a commission. This commission comes from two sources: you and the mortgage lender. You’ll pay for mortgage loan origination by paying a flat origination fee. Ideally loan origination fees should only be one percent of your loan amount, which isn’t hard to negotiate; however, many mortgage brokers charge anywhere from two to five percent so you’ll want to be careful with this fee.

Yield Spread Premium

The second way mortgage brokers get a commission for their work is form the lender. Mortgage lenders pay a commission to the broker for locking and closing your loan with a higher than necessary interest rate. This markup of your mortgage rate creates a cash bonus for the broker for overcharging your and is known as Yield Spread Premium. If you want a good deal on your next mortgage loan you MUST avoid Yield Spread Premium or you’ll be thousands of dollars too much for as long as you keep the loan.

Yield Spread Premium sounds scary and most homeowners have never heard of the term however, like other mortgage garbage fees it’s not hard to avoid. When you negotiate a flat one percent origination fee without Yield Spread Premium you’ll be taking advantage of wholesale mortgage rates and saving thousands of dollars in mortgage interest. The mortgage videos on this website show you exactly how to do this in an easy to follow, step-by-step guide.

Junk Refinance Fees

There are a number of other refinance fees you’ll need to avoid that are pure garbage. If for instance your mortgage broker charges you a rate lock fee you’re probably dealing with a dishonest mortgage broker. There isn’t one single mortgage lender in the country that charges a fee for locking in your mortgage rate…this fee is pure garbage and headed right into your mortgage broker’s pocket if you agree to pay it. Other garbage refinance fees you should be on the lookout for include broker courier fees and loan processing fees.

You can learn more about refinance fees you need to avoid including strategies for refinancing your home loan with a wholesale mortgage rate by registering for my Underground Mortgage Videos available on this website. You’ll get immediate online access to the mortgage videos and all refinancing materials in our password protected member’s area.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

No related posts

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.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Mortgage Refinance Information: Tips You Need to Know

Robert — Sun, 07 Dec 2008 22:23:46 +0000

If you are like most homeowners seeking mortgage refinance information online you’re already familiar with discount points and how they affect your mortgage rates.

What you may not know is that the mortgage industry has a little known dirty secret called Yield Spread Premium.

Simply put, Yield Spread Premium is the opposite of a discount point. Someone… just not you… is getting cash from the lender for marking up your mortgage interest rate. Here are the basics you need to know to avoid paying too much when refinancing your home mortgage loan.

Mortgage Refinancing & Yield Spread Premium

It sounds like a scary term but Yield Spread Premium is a relatively simple concept to wrap your head around. The majority of homeowners today have never heard of Yield Spread Premium nor do they know that this markup of their mortgage rate was quietly slipped into their existing home loan. According to the government Yield Spread Premium is responsible for American homeowners overpaying nearly sixteen billion dollars this year alone.

How Yield Spread Premium Works

Here’s an example: suppose you are refinancing your mortgage for $250,000 and your mortgage broker tells you that you qualify for a mortgage rate of 6.5 percent. What you don’t know is that you actually qualify for a mortgage rate of 6.0%. The “spread” is the difference between what you got and what you could have had…in this example .5%.

The premium created in this example is a 2% commission for the mortgage broker for lying to you. In this example the mortgage broker walked away with a $5,000 payday from the mortgage lender for overcharging you. This is in addition to any fees you paid to the broker for loan origination. 99.99% of homeowners have mortgage loans with higher than necessary mortgage rates. Most likely you’re already paying thousands of dollars too much for your existing mortgage loan.

Yield Spread Premium Can Be Avoided

You can refinance your existing home loan without this unnecessary markup of your mortgage rate. Homeowners who learn to recognize and avoid Yield Spread Premium are able to take advantage of the wholesale nature of mortgage rates and save thousands of dollars every year pay a mortgage. The free online videos available on this website will show you an easy-to-follow method of refinancing your mortgage without this markup of your interest rate and how to avoid lender junk fees.

Check out my Underground Mortgage Videos and you’ll also receive a list of mortgage brokers in your area that don’t mark up mortgage rates to get you on the right track to refinancing without paying too much for your next mortgage loan.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Mortgage Rate Quotes Online

Robert — Mon, 24 Nov 2008 00:05:01 +0000

If you’re taking advantage of the Internet to shop for mortgage quotes you’ve probably seen a wide range of fees and mortgage rates from one site to the next. Nothing changes with you from one site to the next why should the mortgage rate quotes you receive be so different?

Here is your online mortgage refinancing survival guide to help you understand Internet mortgage quotes and avoid paying too much for your next home loan.

Online Internet Mortgage Companies

The first thing you should know about the big mortgage websites like Lending Tree is that most of these sites have absolutely nothing to do with mortgage loans. That’s right, despite Lending Tree’s enormous advertising budget and flashy website they have nothing to do with getting you a mortgage loan. What these websites do is collect and sell your information, known as a “mortgage lead” to the various mortgage companies and brokers that participate in their networks.

While using one of these sites is not necessarily a bad thing, sites like Lending Tree take things a step too far. If you read the “licenses and disclosure” page on Lending Tree’s website you’ll discover that if you actually take out a mortgage from one of the lenders in their network you’ll be charged a “computerized loan origination fee” by the lender. This is passing Lending Tree’s fee on to you the homeowner.

The next thing you should know about Internet mortgage quotes is that they all include commission based markup of your mortgage rate. This means you’re paying a higher interest rate than you have to just to give the mortgage company or broker a commission on your loan. This markup of your mortgage rate is called Yield Spread Premium and is a percentage of your loan amount created when the broker locks and closes your home loan with a higher than necessary interest rate. This higher than necessary mortgage rate results in a higher than necessary mortgage payment which can drain thousands of dollars unnecessarily from your budget every year.

How to Refinance with a Wholesale Mortgage Rate

It is possible to refinance your home mortgage paying a flat one percent origination fee without Yield Spread Premium. The techniques described in the free mortgage videos available on this website allow you to take advantage of the wholesale nature of mortgage rates and save thousands of dollars each year. The videos also show you how to read your Good Faith Estimate and HUD-1 Settlement statements to avoid paying lender junk fees. Register today, the mortgage videos are yours free with no obligation.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

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.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Mortgage Rates At Lowest Levels Since 2005

Robert — Fri, 11 Jan 2008 00:10:20 +0000

Your monthly mortgage payment amount is determined by the amount you borrowed and the mortgage you qualified. Mortgage rates are currently at their lowest levels since 2005; if your financial situation has changed since you purchased your home you could significantly lower your payment with a lower mortgage rate. Here are several tips to help you decide if this is the right time to refinance your home loan.

Wholesale Mortgages Rates

If you are a homeowner with good credit the current wholesale mortgage rate is 5.5 percent. Refinancing your mortgage with wholesale rates can be tricky as most homeowners don’t understand how mortgage rates are quoted. The rate quotes your receive online and from your mortgage broker are actually “retail” mortgage rates and can be as much as a half percent to a full percent higher than the going wholesale rate.

What Makes Mortgage Rates Retail?

Mortgage brokers are basically commission based salespeople. Your broker is compensated for their work in two ways; you will pay an origination fee for their services and the lender pays a “rebate” to the broker for closing your loan. A reasonable fee to pay for loan origination is one point, or one percent of your loan amount. If you can get away paying less than one percent you’re doing well, but what about the broker rebate paid by the lender? Should you be concerned about this fee since it’s not coming out of your pocket?

The short answer is yes. You should be very concerned about this fee not because the lender is paying it, but why the lender is paying. Broker rebates are paid for one reason and one reason only. This rebate is a reward for closing loans with above market mortgage rates. That’s right; your mortgage broker receives a bonus form the lender for overcharging you. In the industry this “reward” is called Yield Spread Premium and could wind up costing you thousands of dollars in unnecessary finance charges.

The Mortgage Industry Has a Dirty Little Secret…

Here’s an example to illustrate how the broker rebate works. Suppose you refinance your home for $300,000 and your broker tells you that you qualify for a 6 percent mortgage rate. You agree to pay one point for loan origination which is a perfectly reasonable fee to pay the mortgage broker. This fee amounts to $3,000 paid out of your pocket at closing. But what is your mortgage broker not telling you?

Today’s wholesale mortgage rate is 5.5%. If you agree to a 6.0% mortgage rate that means the loan has .5% Yield Spread Premium. Mortgage lenders pay one point for every quarter percent the broker overcharges you. In this example the broker receives an additional $6,000 on top of the $3,000 you’re already paying. That’s $9,000 for a few hours work and that’s only half the problem.

The real stink of Yield Spread Premium comes form the fact the most brokers will never admit what they’re doing with your mortgage rate and never properly disclose this fee. Most mortgage brokers leave it off the Good Faith Estimate entirety, give you a bogus rate lock confirmation instead of the one from your lender and if you happen to catch the rebate on your HUD-1 statement explain the fee away by saying “It’s not coming out of your pocket, don’t worry about it.

What’s Wrong With Yield Spread Premium?

By accepting an above market mortgage rate your payments will be higher than they need be and you’ll be wasting money on unnecessary finance charges. Because this fee is never properly disclosed your mortgage broker is all but lying to you about the loan and taking money out of your pocket. Is this the mortgage you thought you were getting when the broker quoted you a six percent interest rate?

The good news is that you can avoid mortgage broker rebates when refinancing. There are honest mortgage brokers out there that will work for the origination fee alone without marking up your mortgage rate; you just have to find one. A good place to start is the Upfront Mortgage Brokers Association; members of this association agree to conduct their business following certain ethical and professional standards. Not every State has members however; if your State does not you can still find honest mortgage brokers by doing your homework and shopping for the right broker.

You can learn more about refinancing your mortgage with a wholesale mortgage rate by registering for a free DVD. Register today, this mortgage DVD is yours free with no obligation.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Beware Internet Mortgage Scams

Robert — Mon, 31 Dec 2007 21:36:28 +0000

The Internet is an excellent tool for refinancing your home mortgage and can save you thousands of dollars; however, you need to know that big named mortgage companies run scams online every day. These are companies you see advertising on television and if you’re not careful you could overpay thousands of dollars for your next mortgage. Here are several tips to help you protect yourself when refinancing your home loan on the Internet.

When Lenders Compete You Lose

Have you seen those commercials on television about making banks compete for your business when taking out a mortgage? It sounds great…mortgage loans are a fiercely competitive industry and anything that gets lenders competing for your business can’t be a bad thing right? Wrong!

What is Lending Tree Really?

The first thing you need to know about Lending Tree is that they are not a mortgage lender and actually have nothing to do with mortgage loans whatsoever. Lending Tree and many of the other big named sites you see on the Internet are simply lead generation sites. They put up a flashy website, advertise on television, and sell your information to the four highest bidders. Lenders are competing for your personal information, not your business. Once these lenders have your information you will start receiving phone calls and emails soliciting mortgage loans.

The fact that you have lenders calling you isn’t really the problem with lending tree. The real problem comes from the fee they slip into your loan without your knowledge. Lending Tree for example tells you that they do not charge you a fee for using their service; however, the fine print says otherwise.

Always Read The Licenses & Disclosure Pages

If you read the fine print on Lending Tree’s Access and Disclosure statement you will find that while Lending Tree Claims they are not charging you a fee for their services, you will have a charge on your Good Faith Estimate that will be paid to them by the lender. Because you’re paying the lender the fee for Lending Tree they claim their service is free to use; however, the money still comes out of your pocket even if it’s being paid by the lender. This is only the tip of the deceptive advertising.

Reading further on this Licenses and Disclosure page reveals not only will you be charged a fee for filling out the form on Lending Tree’s website but this fee will be as much as $1,300. That’s $1,300 you’ll have to pay just for filling out your name and address on Lending Tree’s form!

Not only is this deceptive advertising on Lending Tree’s part but this is a ridicules fee to charge someone for selling their information to the highest bidder. Lending Tree had a class action lawsuit filed in 2006 for unfair business practices and deceptive advertising. Is this a company you want involved with your next mortgage loan? You can learn more about protecting yourself from predatory lending practices when refinancing and ways to save money in the process register for a free mortgage DVD.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Should You Refinance Your Option Adjustable Rate Mortgage?

Robert — Tue, 11 Dec 2007 22:15:33 +0000

If you purchased your home with an option adjustable rate mortgage because you needed the lowest payment possible you should be very concerned about all the trouble brewing in the mortgage industry. When your option ARM begins resetting coupled with the declining values of homes across the country it could become extremely difficult for you to keep up with rising mortgage payments. Here are several tips to help you decide if refinancing your option adjustable rate mortgage is right for you.

Payment Option Adjustable Rate Mortgages

Pay option mortgage loans are relatively new and offer a great deal of flexibility for the savvy homeowner or Real Estate investor. The problem is that many people who purchased homes with these loans don’t understand how they work and blindly go on paying the minimum amount due each month until the lender recasts their loan and find out that foreclosure is a short 120 days away.

If you’re reading this and are unfamiliar with payment option mortgages, they are a very flexible mortgage with several different payment options. Homeowners with these loans can make payments on any given month based on the following options:

15 year or 30 year amortization
Interest Only
Optional Minimum Payment

The first option is a fully-amortized payment meaning that portion is applied to your loan balance after the interest is paid. If you choose to make the interest only payment you will only pay the finance charges due each month without paying down your loan balance. The “optional minimum payment” is what gets homeowners in trouble. This payment does not cover all of the interest due in a month. The unpaid portion is added to the loan balance every month. This means that your mortgage is actually growing over time and when it reaches a certain threshold, usually 125% of your loan amount, the lender will “recast” your loan.

Recasting means that the mortgage is converted to a standard adjustable rate mortgage amortized for the time remaining in your loan contract. For many homeowners this results in payment shock that they are unable to recover from and ultimately lose their homes.

Are You Running Out of Options?

If you are a homeowner who has been making the minimum payment month in and month out you should refinance your loan immediately. Your option mortgage is a ticking time bomb that could cost your home. The payment option mortgage problem is not limited to homeowners with poor credit; industry analysts estimate that there are 580 billion dollars in outstanding option loans from 2005 and 2006 alone. Analysts expect many of these loans to end in foreclosure due to declining home values.

Protect Your Home

How can you protect yourself from mortgage payment shock with your option mortgage? Use a mortgage calculator to predict your monthly payment when your loan resets. Read your mortgage contract and find out what the lender’s margin is when calculating your future payment amounts. If you find that you will not be able to afford the payments after the reset consider refinancing with a hybrid adjustable rate mortgage to keep your payments low and lock in your mortgage rate for the time being.

You can learn more about your mortgage refinancing options; including costly pitfalls to avoid when dealing with mortgage brokers with a free mortgage DVD. Request yours today.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice:

Mortgage Refinance Information

Robert — Tue, 07 Aug 2007 20:20:40 +0000

If you are a homeowner considering a new mortgage to refinance your existing loan, the process can be intimidating. No one wants to pay too much for anything and mortgage refinancing is no exception. You may have arrived at this site searching for “mortgage refinance information” and you’ve come to the right place. Here are several tips to help you find the perfect mortgage when refinancing.

How to Get Started Refinancing Your Mortgage

The first thing you need to do before shopping for a new lender is to take stock of your credit Your credit score largely determines the interest rate you will qualify for when refinancing, and if you have mistakes in your credit reports it will cost you. Credit reports are maintained by three separate credit reporting agencies and they’re not very good at sharing information. Make sure you go over all three reports with a fine-tooth comb and dispute any errors you find with each credit agency.

The three credit agencies responsible for maintaining your records are Equifax, Experian, and Trans Union. There are hundreds of sites out there offering free credit reports and scores if you purchase their credit monitoring service. Don’t fall for these scams; recent legislation in the United States requires each credit agency to provide you with one free copy of your credit file every year. You won’t get a credit score using this service; however, your credit score is not necessary for refinancing. If you really want to know the score you can find out from the mortgage lender. Print out all three copies of your credit report by visiting the website annualcreditreport.com.

How to Shop for a New Mortgage When Refinancing

Once you’re certain that your credit reports are error free you are ready to begin comparison shopping mortgage offers. There are several different types of mortgage lenders, and types of lenders you need to avoid. The basic lender types you need to be aware of include wholesale mortgage lenders, banks, and correspondent lenders also known as broker-banks.

Mortgage Refinance Information

The Real Estate Settlement Procedures Act, RESPA for short, is legislation in the United States that protects homeowners by requiring mortgage lenders to disclose their markup and profit margins on your loan. You may already be familiar with the Truth in Lending laws that require lenders to disclose the cost of borrowing as an Annual Percentage Rate (APR). The problem with APR is that while lenders are required to disclose this figure, there is no standardized method of calculating the percentage and every lender calculates their APR differently. This lack of standardized calculating makes the Annual Percentage Rate worthless for comparing loan offers.

The Real Estate Settlement Procedures Act makes up for the shortcomings of the Annual Percentage Rate, except that banks and broker-banks are exempt from this legislation. The Banking Lobby spent millions of dollars lobbying congress so that your bank doesn’t have to play by the same rules as other mortgage lenders. Banks are not required to disclose any of the markup they add to your mortgage interest rate; if you refinance your mortgage the bank is the only one that knows how much you’ll overpay.

As for correspondent lenders and broker-banks, these are simply banks pretending to be mortgage brokers. How can you tell if your mortgage broker is not a broker-bank? Ask if the broker closes in the name of the wholesale lender or in the name of their own company. If the answer you get is the loans are closed in their company’s name you know that you’re dealing with a broker bank. Never refinance your mortgage with a bank, broker-bank, or correspondent lender.

Mortgage Refinance Information and Yield Spread Premium

Now that you know a wholesale lender is the way to go when refinancing your mortgage, how do you find a wholesale lender to approve your loan? The average homeowner does not have access to wholesale mortgage rates so we’ll need to rely on a mortgage broker to access them for us. Refinancing your mortgage with a broker is a lot like buying a used car. Most mortgage brokers have the used car salesman mentality when selling you a mortgage loan; brokers try and explain away their markup of your mortgage interest rate as compensation paid by the lender.

This markup of your mortgage interest rate by the broker is called Yield Spread Premium and is responsible for most homeowners unknowingly overpaying when refinancing. Yield Spread Premium is simply the difference between the mortgage rate your wholesale lender approves you and the interest rate you close with after the broker marks it up. Mortgage brokers charge you Yield Spread Premium because the wholesale lender pays them a bonus of one percent of your loan amount for every quarter percent you agree to overpay. Yield Spread Premium is nothing more than an incentive for overcharging you and is a topic of heated debate in Congress.

The good news for you is that you can avoid this unnecessary markup of your mortgage interest rate. By learning how to recognize Yield Spread Premium on your Good Faith Estimate and HUD-1 statement you can avoid paying this markup. You can learn more about refinancing with a wholesale mortgage rate and avoiding Yield Spread Premium with my free mortgage video tutorial. You can register for the tutorial by clicking the DVD image at the top of this page; the videos are free and there is no obligation whatsoever.

---
Related Articles at Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice: