Home Mortgage Refinancing Guide

If you’re searching for information on the Internet to help you refinance your home loan, you’re probably concerned about paying too much for the new mortgage. Most homeowners understand how mortgage rates affect their monthly payment amount but not many know their mortgage rates are marked up to give a commission to the broker.

Here are several tips to help you avoid this unnecessary markup of your mortgage rate while avoiding lender junk fees.

The commission based markup of your mortgage rate is known as Yield Spread Premium (YSP). Simply put, YSP is a percentage of your loan amount paid by the lender when your mortgage broker locks and closes your mortgage with a higher than necessary mortgage rate. Lenders pay a commission to brokers for overcharging homeowners because these loans bring a premium profit when sold to investors on the secondary mortgage market.

Here’s a simple example of Yield Spread Premium. Suppose you’re refinancing your home for $150,000 and the broker tells you the lender approved your loan at 6.75%. You agree to pay the broker a 3% origination fee for their services and walk away with a monthly payment of $972 per month. What your mortgage broker didn’t tell you is that the lender actually approved your for a 6.0% mortgage rate which would have saved you $75 per month…that’s $900 per year you’re throwing away because your mortgage broker lied to you. In this example a lie of omission is still a lie right?

Refinance My Home Loan Today

Yield Spread Premium sounds like a scary technical term, but that’s really all there is to it. The HUD Secretary was quoted saying American homeowners will overpay almost sixteen billion dollars this year alone and Yield Spread Premium is responsible. It is possible however to refinance your home loan without paying this unnecessary markup. There are honest mortgage brokers out there willing to work for a flat origination fee of one percent without inflating your mortgage rate. The free videos available on this website will not only show you how to find this person but how to avoid lender junk fees. When you register for the refinancing videos you’ll also get a list of recommended mortgage brokers in your area to help get you on the right track.

If you’re considering refinancing your home mortgage you may be concerned about how to refinance without getting ripped off. According the Secretary of Housing and Urban development homeowners in the United States overpay nearly sixteen billion dollars every year in the form of junk fees and unnecessary mortgage rate markup.

Here are several tips to help you refinancing your mortgage without paying too much for your next home loan.

Beware Yield Spread Premium

There is one mortgage “secret” you need to know about in order to prevent yourself from being ripped off by your mortgage Broker. Mortgage lenders pay brokers to markup your mortgage rate with a commission known as “Yield Spread Premium.” Simply put, Yield Spread Premium is a percentage of your mortgage amount created when the mortgage broker locks and closes your loan with a higher than necessary mortgage rate. This means you could have refinanced your mortgage for less…in most cases much less.

How Yield Spread Premium Drives Up Your Payment Amount

Suppose you need to refinance your Adjustable Rate Mortgage because the lender will soon reset the loan and raise your payment amount. You need $250,000 to pay off the old mortgage including the prepayment penalty from your former lender. Your mortgage broker tells you that you qualify for a 6.5% mortgage rate and will “only” charge you 2% for the origination fee.

What your mortgage broker isn’t telling you is that you qualified for a 5.5% mortgage rate and they’ve marked it up to 6.5%…that’s a full point just to get a commission from the lender. How does this markup affect your mortgage payment? Had you gotten the mortgage rate you qualified for your monthly payment on a 30-year fixed rate loan would have been only $1400. Since your broker ripped you off in this example your payment will be $1,580! That’s an extra $2,160 you’re paying unnecessarily every year you keep this mortgage.

How to Refinance Without Yield Spread Premium

It is possible to refinance your mortgage without paying this unnecessary markup of your mortgage rate. If you follow the system outlined in the free videos on this website you will be able to refinance your home loan paying a flat fee of 1.0% to the mortgage broker without any commission based markup of your mortgage rate. This allows you not only to take advantage of wholesale mortgage rates but the free videos show you how to avoid lender junk fees in the process, saving you thousands of dollars at closing. Register today, the mortgage videos are yours free with no obligation.

If you’re considering mortgage refinancing you’re probably on the Internet searching for the best mortgage rates and wondering where to find them. What makes a mortgage rate good? It’s the lowest one out there right?

Finding the lowest rate and getting the lowest mortgage rates are two entirely different things. Here are several tips to help you get the best mortgage rates and save thousands of dollars in the process.

Finding the Best Mortgage Rates

The Internet is an excellent tool for comparing mortgage rates; however, most homeowners shopping for a mortgage on the Internet today are simply comparing the best of the worst mortgage rates available. Why is this?

The mortgage rate quotes you receive online almost always include commission based markup. This commission is a fee paid by the lender to your mortgage broker for the sole purpose of marking up your mortgage rate. Want the best mortgage rates available when refinancing? You’ll have to find a broker willing to work for you for a flat origination fee instead of marking up your mortgage rate.

How to Refinance With the Best Mortgage Rates

Finding the lowest mortgage rate when refinancing is easier than you think; you’re not actually shopping for a rate quote when refinancing, you’re looking for the right person to arrange your loan. The ideal mortgage broker for the job will be self-employed, even working out of their home. Are you crazy? Trust my mortgage loan to a home-bound shut in of a mortgage broker without a posh office or expensive sales staff? Oh wait a minute…you might be on to something here…

That’s right…the ideal mortgage broker working out of their home is going to be much more willing to negotiate with you over fees and their commission…one that will not include marking up your mortgage rate for a commission. If you follow the system outlined in the free mortgage videos on this website you’ll be able to refinance your home paying a flat origination fee of one percent and no junk fees.

Mortgage Yield Spread

So what is this commission based markup and how does it work? Simply put, your broker can receive a commission from the lender for locking and closing your loan with a higher than market mortgage rate. This percentage of your loan amounted created when you agree to pay more than necessary is called Yield Spread Premium and avoiding it needs to be the number one priority when refinancing your home loan. Register for the fee mortgage video guide on this website today and you’ll be on the path to saving thousands of dollars every year that you have a mortgage loan.

Remember those old commercials “I’m not going to pay a lot for this muffler!” This is the attitude people should adopt with their mortgage companies when it comes to refinancing a home loan. Unfortunately saying it and actually doing this are two entirely different things…unless you learn how mortgage companies make their money. Here are the basics you need to know so you can look your mortgage broker squarely in the face and say “I’m not going to pay a lot for this mortgage!”

Mortgage Secrets Revealed

The last thing your mortgage broker wants you to know is how he or she makes their money. I’m going to spill the beans that nearly every mortgage originator in the country hopes you don’t know…where their money comes from.

Mortgage brokers and other businesses that arrange mortgage loans for people make money from two sources. First, they can charge you a fee known as a loan origination fee for their part in arranging your loan. This loan origination fee can range from anywhere from one percent to as much as five percent of your loan amount. One percent is a reasonable amount to pay for the mortgage broker’s part in arraigning your home loan.

The second way your mortgage broker receives a commission for your loan is with a fee paid by the lender. This fee comes from something known to brokers as Yield Spread Premium. In the simplest definition, Yield Spread Premium is a percentage of your loan amount created when the broker locks and closes your home loan with an above market mortgage rate. The percentage created is their commission for overcharging you.

That’s right, you could have refinanced with a lower mortgage rate but the broker or mortgage company marked your rate up to get a kickback from the lender. Think your mortgage broker would ever tell you they’re doing this? Guess again…most loan originators have clever tricks to disguise Yield Spread Premium in your loan documents. Add in the fact that most people have never heard of Yield Spread Premium and it’s no wonder that according to the Secretary of Housing and Urban Development homeowners in the United States overpay nearly sixteen billion dollars every year.

There is good news since you’re reading this blog post today. Now that you know what Yield Spread Premium is you’ve got a leg up over 90% of homeowners and most of the mortgage brokers in this country. All you have to do is find the right broker to arrange your loan…one willing to work for a loan origination fee of one percent without creating Yield Spread Premium on the loan.

You can learn how to do this for yourself by registering for the free videos found on this website. When you register you’ll get a list of recommended mortgage brokers in your area and access to a free video tutorial that will show you how to refinance without paying junk fees on your loan.

Mortgage rates dropped again this week for most loan types. The drop was not as much as we saw last week; however, it’s always good to see mortgage rates go down.

Today’s thirty year fixed mortgage rate dropped to 6.14%, down from 6.2%. This is a small drop compared to the volatility we’ve witnessed in previous weeks. Here’s a rundown of today’s mortgage rates.

Even though today’s drop is slight this does not mean there will not be large fluctuations in the coming months. The markets have not yet stabilized following recent financial turmoil and the outlook for improvement is not so good. The good news is that mortgage rates seem to be declining across the board. Fifteen year mortgage rates fell .07 points to 5.81%, the five year adjustable fell .21 points to 5.98%, and the one year adjustable actually went up to 5.33%.

Mortgage Rate Trends:

November 13th 2008

• 30 year fixed: 6.14%
• 15 year fixed 5.81%
• 5 year adjustable 5.98%
• 1 year adjustable 5.33%

November 6th, 2008

• 30 year fixed: 6.2%
• 15 year fixed: 5.88%
• 5 year adjustable: 6.19%
• 1 year adjustable: 5.25%

October 30th, 2008

• 30 year fixed: 6.46%
• 15 year fixed: 6.19%
• 5 year adjustable: 6.36%
• 1 year adjustable: 5.38%

October 23rd, 2008

• 30 year fixed: 6.04%
• 15 year fixed: 5.72%
• 5 year adjustable: 6.06%
• 1 year adjustable: 5.23%

Tracking the fluctuations in mortgage rates can be entertaining; however, it’s more useful to see how these changes affect your monthly payments. A free mortgage payment calculator will show you exactly how mortgage rates impact your payments. Here’s an example with a $200,000 home loan.

Mortgage Rates from 13 November:

• 30 year fixed payment: $1217
• 15 year fixed payment: $1667
• 5 year adjustable payment: $1196
• 1 year adjustable payment: $1114

Mortgage Rates from 30 October:

• 30 year fixed payment: $1258
• 15 year fixed payment: $1708
• 5 year adjustable payment: $1245
• 1 year adjustable payment: $1120

You’ll notice that over the last two weeks your monthly payment on a $200,000 loan would be $41 less per month just due to fluctuations in mortgage rates. That’s almost $500 per year! If you’re in the market to refinance your existing mortgage or take out a new loan to purchase your home your best bet right now is probably to stay away from the five year adjustable rate mortgage. Volatility in the market and our bad economy makes locking in a fixed rate a good idea for most homeowners.

Since we’re on the subject of today’s bad economy many homeowners are finding it difficult to get approved when refinancing their loans. This isn’t typically due to credit but in most cases is because they are underwater or upside down with their existing loans. Being “underwater” simply means that you owe more on your existing loan than your home is worth. If you’re in this situation you simply will not be able to refinance your home until you’re able to pay down your loan below your home’s value.

You can learn more about refinancing your existing mortgage without paying too much and getting the lowest possible rate by registering for the free mortgage videos on this site.