Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice » mortgages for dummies

Home Mortgages for Dummies

Robert — Sat, 13 Feb 2010 20:53:39 +0000

If you’re looking for home mortgages to purchase your home or to refinance your existing mortgage there are several things you need to know about home mortgage rate quotes to avoid paying too much. 2010 has seen some changes to the Real Estate Settlement Procedures Act; however, these changes are still too little too late when it comes to protecting homeowners from abusive lending practices. Here are several of my best mortgage tips to help you get a wholesale mortgage rate for your home mortgages while avoiding unnecessary junk fees and save as much as $1200 per year.

Home Mortgages for Dummies

Everyone wants the lowest mortgage rates for their home loans and the Internet makes it very easy to shop for mortgage rate quotes. One thing that you might not know about those mortgage rate quotes you find on the Internet and get from your local mortgage companies is that they’ve all been marked up to create a commission for the person arranging your home loan. What’s wrong with that you might ask, I mean mortgage brokers gotta eat too right? That’s why you pay an origination fee for the mortgage broker or company arranging your home loan. Origination fees paid out of pocket don’t drive your mortgage payment up, taking cash out of your pocket for no good reason. Do you really want to pay that person’s commission over and over every month that you keep your home loan?

Beware Yield Spread Premium

Driving your mortgage payment up unnecessarily is what taking a higher mortgage rate to pay the broker commission does. One of the changes for 2010 in the Real Estate Settlement Procedures Act is that mortgage brokers have to include Yield Spread Premium with their loan origination fee in your loan documents. This fee for markup of your mortgage rate has always been on the HUD-1 statement; however, shady mortgage brokers explain it away by telling you that because the fee is coming out of the lender’s pocket they don’t need to worry about it. There is nothing in the law now that prevents loan originators from doing this so it’s pretty much business as usual for dishonest mortgage brokers.

How to Avoid Unnecessary Mortgage Rate Markup

The good news for you is that you don’t have to be a financial guru to get a wholesale mortgage rate that doesn’t include this unnecessary markup or junk fees. It all comes down to finding the right mortgage broker for the job, one willing to work for a flat and perfectly reasonable origination fee of one percent. That’s what you want to pay…one percent up front that won’t drive up your mortgage rate and monthly payment for no good reason.

Finding the right mortgage broker for the job isn’t hard either…there are plenty of honest, hardworking mortgage brokers out there with families to feed just like yours. Local mortgage brokers are almost always better… local, self-employed mortgage brokers don’t have the costly overhead that comes with a nationwide company. You can get started by checking out the mortgage brokers in the phone book. Tell them that you understand how Yield Spread Premium works and simply will not accept any mortgage loan that includes this markup. Offer to pay a flat origination fee of one percent and you’ll be well on your way to getting a wholesale mortgage rate for your next home mortgage loan.

You can learn more about Yield Spread Premium and how it drives up your mortgage payment unnecessarily by checking out my free underground mortgage refinancing videos.

Here’s a sample of what you get for free today… this module explains why 95% of your neighbors overpay for their home loans.

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Mortgage Refinance Options

Robert — Sun, 10 Jan 2010 17:55:38 +0000

If you are considering a new home loan there are a number of mortgage refinance options available today that allow you to lower your monthly payment, even consolidate your higher interest debt, keeping more cash in your monthly budget. The only problem with today’s mortgage refinance options is the number of people trying to make a quick buck at your expense. Here are several tips to help you evaluate your options while avoiding unnecessary markup and junk fees.

Mortgage Refinance Options

Most homeowners refinance their mortgage loans to get a lower mortgage rate and a lower monthly payment. While this is one of the most common refinance options available there are a number of other reasons to refinance even if you can’t get a lower mortgage rate. Consolidating high interest credit card debt is another popular mortgage refinance option that can save you a lot of money considering how much the ridiculous credit card companies have jacked up their interest rates during the recession. Refinancing your mortgage and taking cash back from your home equity to pay off and hopefully cut up your credit cards could result in a slightly higher mortgage rate; however, it would still be much lower than the criminally excessive 20% or more charged by many credit card companies today.

If debt consolidation using mortgage equity isn’t one of your goals you might wonder if mortgage refinancing is the right decision. Ever hear of the two percent rule of mortgage refinancing? The two percent rule of mortgage refinancing states that you should not considering refinancing unless the new mortgage rate is at least two full percent lower than what you’re currently paying. This is one of the bits of most commonly quoted bad advice that you’ll encounter as a homeowner. Instead of basing your decision to refinance on an old wives’ tale, it makes more sense to base financial decisions regarding your home on a cost vs. savings basis.

How to Decide if Mortgage Refinancing is a Good Decision

It’s going to cost you money to refinance your home…this can’t be avoided. Application fees, rate lock and origination fees and closing costs await you should you decide to refinance your home loan. Some of these fees are blatant mortgage junk fees that savvy homeowners can easily avoid. Don’t worry if “financially savvy” aren’t two words you’d use to describe yourself, the free mortgage videos on this website will show you how to cut $1200 worth of fat from your mortgage loan every year.

Getting back to your decision to refinance, there is an easy way to decide if mortgage refinancing makes sense for you, assuming your goal is to save money with a lower payment. Simply add up all of the costs associated with refinancing your home loan found on your Good Faith Estimate and divide by how much lower your monthly payment will be on the new mortgage. Here’s an example to illustrate. Suppose your current mortgage payment is $1,400 and refinancing will get you a lower payment of $1,100. The estimated fees and closing costs for the new mortgage total $6,500. The difference in your mortgage payment will be $300 and with that savings it will take you just over 21 months to recoup your closing costs before you realize any benefit from the new mortgage. If you can live with this timeframe then mortgage refinancing makes sense. Keep in mind that getting a lower payment isn’t the only mortgage refinance option available and there are situations where refinancing with a higher monthly payment makes just as good financial sense.

What About Mortgage Junk Fees & Unnecessary Markup?

Like anything else you purchase there are people trying to take advantage of your mortgage to make a buck. As we’ve all learned banks are greedy shameless institutions that exist solely to take your money. The same is true to a lesser degree of nearly every financial advisor and mortgage broker you’ll encounter when exploring your mortgage refinance options. What you need is a clear roadmap for avoiding unnecessary mortgage rate markup and junk fees used by banks and mortgage brokers to boost their profits at your expense.

Did you know that most mortgage brokers mark up the mortgage rates they quote to collect a hidden, second commission from your mortgage lender on top of the origination fee you’re already paying for arranging your home loan? Banks have the same hidden profit margin built into their mortgage rates and your Good Faith Estimate is full of junk fees that serve no purpose other than lining your loan originator’s pockets at your expense. How can you avoid unnecessary mortgage markup and junk fees when refinancing your home loan? Check out my free Underground Mortgage Videos and I’ll show you how to save as much as $1200 per year by cutting the fat from your mortgage loan.

You can learn more about your mortgage refinance options without paying unnecessary markup or junk fees by checking out my free Underground Mortgage Videos.

Here’s a sample of what you get when registering today…this video exposes the reason 95% of your neighbors pay too much for their mortgage loans.

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Free Refinancing Information

Robert — Wed, 02 Dec 2009 22:07:31 +0000

If you’re searching the Internet for free refinancing information you probably already know that there’s a lot of bad mortgage advice on the web. Everyone with a website is a self-proclaimed mortgage refinancing expert claiming that they have the lowest rates and fees. The problem is that many people, including almost all of your neighbors, wouldn’t know a good mortgage deal if it came and sat in their lap. First of all, I’m not here today to sell you a mortgage loan; the free refinancing information on this site will show you how to recognize a good mortgage deal when you find one. Here are my best mortgage refinancing tips to help you get a great deal when refinancing your home loan without paying unnecessary markup or junk fees.

Free Refinancing Information Online

There are tons of mortgage refinancing resources available on the Internet and an equal amount of bad mortgage advice. One of the more famous and equally bone-headed tidbits of bad advice you’ll encounter is the so called two percent rule of mortgage refinancing. People still quote the two percent rule when asking if it makes sense to refinance their mortgage loans. Simply put the two percent rule of mortgage refinancing states that you should not refinance your home loan unless your new mortgage rate is at least two percent lower than the mortgage rate you’ll get from refinancing.

Compare Mortgage Refinance Rates

Rather than relying on this old chestnut of bad mortgage advice it makes more sense to evaluate your decision to refinance based on how much it will cost you and how long it will take to recoup your expenses. Keep in mind that not everyone refinances their homes to get a lower payment. If you’re the market to consolidate bills or borrow cash against your home equity you could wind up with a higher mortgage rate and payment than you have now; however, it could still make good sense to refinance in your situation. If you’re in market for a new home loan with a lower mortgage rate and payment you’ll want to weigh your options based on the cost/savings of a new mortgage loan.

Every mortgage loan has closing costs that you’ll have to pay…and some more than others. These closing costs include fees charged by the underwriter, origination fees charged by the broker, various administrative fees and any unnecessary junk fees you unknowingly agree to pay. (Check out the free mortgage videos available on this website to find out more about avoiding these unnecessary junk fees) You can easily calculate how long it will take you to recoup your closing costs on the new mortgage by dividing your total expenses from refinancing by how much lower your new mortgage payment will be. This will tell you the number of months it will take to recoup your closing costs from refinancing…if the timeframe is acceptable to you then it makes sense to refinance the mortgage in your situation.

How to Avoid Mortgage Junk Fees & Unnecessary Markup

There are a number of ways your neighbors overpay for their mortgage loans. The most common is also the least known…a fee paid to your loan originator known as Yield Spread Premium. The person arranging your home loan is called the loan originator and mortgage lenders pay this person the fee known as Yield Spread Premium for locking and closing your home loan with a higher than necessary mortgage rate. This unnecessary markup of your mortgage rate results in a higher than necessary mortgage rate and according to the Secretary of Housing and Urban Development will result in homeowners in the United States overpaying over sixteen billion dollars this year alone.

There are a number of other mortgage junk fees your neighbors agreed to pay that are also the reason they pay too much for their mortgage loans. These junk fees include paying too much for the mortgage broker origination fee as well as agreeing to other junk fees like mortgage rate lock fees, broker courier fees, and excessive loan processing and administrative fees.

You can find out how to avoid all of these junk fees including the unnecessary markup of your mortgage rate for a commission by checking out the free refinancing information in my Underground Mortgage Videos.

Here’s a sample of what you’ll get when you register today. These mortgage refinancing videos are yours free with nothing to buy later on and no obligation.

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Mortgage Brokers Have a Dirty Little Secret

Robert — Mon, 06 Apr 2009 16:49:47 +0000

Did you know your mortgage broker has a dirty little secret? Most professions have a few skeletons in the closet but this one could cost you thousands of dollars every year that you have a home loan unnecessarily.

In fact, this “secret” is so bad that the Secretary of Housing and Urban development said it will be responsible for fleecing American homeowners out of sixteen billion dollars this year alone. What is it? Read the following mortgage tips to help you avoid paying too much for your next home loan.

Mortgage Brokers Compensation

Mortgage brokers should be paid for their work like anyone else; however, like a used car salesman they have ways of padding their commission at your expense. You can expect any mortgage brokers you work with to charge you an origination fee for their services. This origination fee will be clearly marked on your Good Faith Estimate and HUD-1 statement; however, there is a hidden mortgage broker fee you need to be aware of before refinancing your home mortgage.

Mortgage Brokers Secrets

The second way mortgage brokers get paid for their work is a hidden commission from the lender. This commission will never appear on your Good Faith Estimate and most brokers have clever ways of disguising it on your HUD-1 settlement statement. This secret commission from the mortgage lender is called Yield Spread Premium and if you agree to a mortgage with this hidden markup it can cost you thousands of dollars every year that you keep the loan.

Yield Spread Premium is Hidden Markup

Here’s how Yield Spread Premium works. Suppose you are refinancing your home for $250,000 and the mortgage broker quotes you an interest rate of six percent while charging you a two percent origination fee. On the surface six percent sounds like a good deal, even though the origination fee is double what you should be paying, you agree to the loan. This means you have to pay $5000 to the broker for loan origination, your home gets refinanced and everything went smoothly, right? Wrong… What your mortgage broker isn’t telling you is that you were approved for a mortgage rate of 5.25 percent, but they marked it up to get Yield Spread Premium from the lender.

Yield Spread Premium is a percentage of your loan amount created when mortgage brokers lock and close loans with higher than necessary interest rates. You get stuck with a payment based on an interest rate higher than you deserve just to create a commission for the broker. A commission paid in addition to the loan origination fees your mortgage broker is already probably overcharging you…

Hidden Mortgage Markup

How does this hidden markup of your mortgage rate affect your monthly payment amount? In the previous example Yield Spread Premium adds a hundred dollars a month to the payment for a thirty year fixed rate mortgage. That’s $1200 a year you’re throwing down the drain due to your mortgage broker’s deception! Most mortgage brokers don’t talk about Yield Spread Premium and many become angry and defensive when questioned about the markup. Can you blame them? Yield Spread Premium effectively doubles even triples their compensation on the loan… at your expense of course.

You Can Avoid Overpaying for Your Next Mortgage

You don’t have to be a financial guru to get a good deal on your next home mortgage loan. Tell potential mortgage brokers that you will not accept any loan that includes Yield Spread Premium and that you’re willing to pay a one percent origination fee for their services. There are honest mortgage brokers out there willing to work for a one percent origination fee without marking up your mortgage rate and I can send you a list of them in your area.

There are other mortgage junk fees that you need to keep an eye out for: mortgage broker courier fees and rate lock fees are examples of junk fees you should never agree to pay when refinancing your home loan. Before closing on the new loan make sure you get a copy of the HUD-1 settlement statement and go through it with a fine-toothed comb; don’t rely on the Good Faith Estimate to look for these junk fees as this document is little more than a marketing tool used to lure homeowners into overpriced loans.

What About Bank Mortgage Loans?

Can’t you avoid all of this markup and trickery by mortgage brokers simply by refinancing with a bank mortgage loan? While it’s true that your bank doesn’t charge Yield Spread Premium on their loans because your loan is funded with the bank’s money; however, banks have another kind of markup called Service Release Premium that accomplishes the same thing. Also, your bank doesn’t have to disclose Service Release Premium to you because of a loophole in the Real Estate Settlement Procedures Act. You’ll never get as a good a deal from your bank as you could from an honest mortgage broker that hasn’t included Yield Spread Premium on your loan.

What is a Good Mortgage Rate Anyway?

Refinancing your home loan and dealing with mortgage brokers and lenders can be overwhelming. How do you know a good deal when you spot one? The ideal mortgage rate when refinancing your home is what’s known as a par mortgage rate. “Par Mortgage Rates” are ones that don’t cost you discount points to get or create any commission for the Mortgage Company or broker. You’ll never get a par mortgage rate from any bank or credit union and can only get this from the right mortgage broker.

To learn more about refinancing your home loan with the lowest mortgage rate without junk fees or mortgage broker markup register for my Underground Mortgage Videos. You’ll have immediate online access to the mortgage videos as well as a list of mortgage brokers in your area that do not mark up mortgage rates for a commission without downloading anything to your PC or Mac.

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Origination Fee and Points

Robert — Sat, 21 Feb 2009 21:38:40 +0000

Many homeowners absolutely dread refinancing their mortgage loans because they don’t fully understand how the Origination Fee and Points work.

In fact, the Origination Fee and Points are one of the reasons homeowners in the United States will overpay well over sixteen billion dollars this year alone when refinancing their mortgage loans according to the HUD Secretary. Here are several tips to help you avoid being a part of this statistic when refinancing your home loan AND save you thousands of dollars in the process.

Origination Fee and Points

Let’s get started with the origination fee. Sometimes called “origination points” this a fee you will pay to the person arranging your new loan. This person could be a discount mortgage company or a broker. A reasonable amount to pay for loan origination is one percent of your loan amount; however, it is not uncommon for mortgage brokers to charge as much as five percent. If you follow the system outlined in the free underground mortgage videos on this website you can find a loan broker willing to work for one percent without padding your best mortgage rate for a commission…but more on that later.

What About Discount Points

There is another flavor of mortgage points you need to be aware of and that is the so called “discount points.” This is a form of pre-paid interest paid by you at closing in exchange for the lowest mortgage rate. One “discount” point is the equivalent of one percent of your mortgage amount and should lower your mortgage rate by .25%. Some lenders will require you to pay points to get a specific low mortgage rate; however, in today’s market you can get rock bottom rates without paying discount points.

If you have less than desirable credit you might not be able to get around paying points…whether or not it makes sense to refinance in your case depends on how long it will take to recoup your points and closing costs from your savings on the new loan. You can easily calculate the break-even point when refinancing by determining how much lower your new mortgage payment will be each month and dividing your total closing costs including points by the amount of your savings. This will tell you how many months it will take to recoup your expenses from refinancing; if you can live with the length of time it takes to get your money back then refinancing your mortgage probably makes sense in your situation.

This is a much more intelligent method of determining if refinancing is a good idea in your situation than relying on that old wife’s tale known as the two percent rule. (The two percent rule states you should only refinance if the best mortgage rate is two percent lower than you existing rate. A real bonehead came up with this rule…you’d never want to be seen with him and he’d embarrass you at parties.) Getting back to points in most cases you will want to avoid paying discount points whenever possible because mortgage rates are so low right now.

What About Mortgage Broker Markup?

That’s the million dollar question…what about all these sneaky mortgage brokers that mark your interest rate up to get a commission from the lender? I’ll bet you didn’t know they did that? In fact, many brokers become defensive and angry if you ask them about this markup, insisting that the fee they receive from the lender is “none of your business…it’s between me and the lender.”

Well, I’m here to tell you that this “fee” known as Yield Spread Premium is your business and you should be very concerned as to why the lender pays the broker for marking up your mortgage rate. Mortgage lenders love loans that close with higher than market mortgage rates. Your online mortgage lender actually makes the majority of their profits selling loans to investors on the secondary mortgage market and home loans with higher than necessary mortgage rates make them the most profit. This is why mortgage lenders reward brokers that overcharge their customers with a commission known as Yield Spread Premium.

Most homeowners have never heard of this markup and don’t know how to spot it in their loan documents. You’ll probably never see it on your Good Faith Estimate because many brokers leave it off completely. The lender is required by law to disclose it in the HUD-1 statement; however, if you don’t know what you’re looking for at this point it’s probably too late and you’ve already paid too much.

Better luck next time around right? Well, fortunately for you, you’re probably not that far along in the closing process and have time to learn how to avoid this unnecessary markup of your discount mortgage rate that results in overpaying thousands of dollars every year that you keep the mortgage loan. Another little known fact when refinancing your home mortgage loan is that you actually have three days to change your mind and put the brakes on before your lender funds the loan. This is known as your three day rescission rights…you can bail on a shady lender at any time until your loan is funded three business days after closing.

How to Avoid Overpaying the Origination Fee and Points

You might be thinking to yourself I know how to avoid all this on line mortgage broker trickery…I’ll just refinance my home loan with my bank or credit union. Guess again, banks have their own tricks due to a little known loophole in the Real Estate Settlement Procedures Act. Refinance your home loan with a bank and I guarantee you’ll pay more than you have to AND will never know how the bank overcharged you. The best deals when refinancing your mortgage without overpaying come from finding the right mortgage broker for the job.

Your Mortgage broker works for a commission, you’ll never get around this and they do have kids to feed like everyone else; however, they should not be taking advantage of people just to make a hummer payment. There are honest mortgage brokers out there who are willing to work for a one percent loan origination fee without taking Yield Spread Premium on the loan; you just need to know how to find them.

You can learn more about refinancing your home with a wholesale mortgage with my free mortgage refinancing videos. Check out these mortgage videos today and you’ll be able to refinance your home without paying markup or lender junk fees.

Here’s a sample of what you’ll get when you register today without downloading anything to your computer’s hard drive.

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Mortgage Help for Homeowners

Robert — Sat, 31 Jan 2009 20:22:26 +0000

Considering mortgage refinancing this year? Worried about paying too much or taking out the wrong type of loan when refinancing?

It’s true that mortgage refinancing can save you thousands of dollars by lowering your monthly payment amount; however, there are a number of pitfalls that result in paying too much for your new home loan.

There is mortgage help for homeowners that will allow you to refinance without paying markup of your interest rate or junk fees to the broker or lender. Here are several tips to get you on the right track to saving thousands of dollars on your next mortgage loan.

Mortgage Help for Homeowners

If you’re refinancing your home mortgage loan there are several ways to overpay when taking out the new loan. Most of the junk fees and markup you will encounter come from the person arranging your mortgage and can be avoided if you find the right person to work with. Who is the right person to refinance your home mortgage loan? I’ll get to that in a minute but first I’ll tell you who it’s not…your bank or credit union. Many people think taking out a mortgage with your bank is the most convenient way of refinancing; while it’s true banks make it easy to take out a mortgage you are guaranteed to overpay with any bank or credit union and here’s why:

Real Estate Settlement Procedures Act

There is a bit of legislation in the United States called the Real Estate Settlement Procedures Act that protects homeowners from abusive lending practices by requiring mortgage brokers to disclose their markup and profit margins on your home loan. Sounds great right? There’s just one problem with fair lending laws in the United States, your bank and credit union are exempt from them when it comes to mortgage loans. That’s right; the Banking Lobby spent millions of dollars romancing Congress to be exempt from this legislation and succeeded in getting the laws changed so that your bank is exempt from RESPA legislation.

Because of this loophole in the Real Estate Settlement Procedures Act your bank or credit union is not required to tell you how much they’ve marked up your mortgage rate or how much profit they’re making off your home loan. If you refinance your mortgage with your bank you will pay too much…period.

Mortgage Broker Tricks

Now that you know banks are a bad idea for refinancing your home mortgage loan I should tell you that mortgage brokers aren’t much better as a whole. This doesn’t mean that you can’t find honest brokers to work with it just means you have to stay on your toes when shopping for the right broker to refinance your mortgage. Mortgage brokers are not exempt from RESPA legislation like your bank; however, they do have clever ways of disguising their markup and junk fees. Learn how to recognize mortgage broker tricks and you’ll be able to find an honest mortgage broker and save yourself thousands of dollars on your next home loan.

Mortgage Rate Markup

So what is this markup of your mortgage rate anyhow? Simply put your broker marks up your mortgage rate because the lender pays them a commission for locking and closing your loan with a higher than necessary mortgage rate. This fee is known as Yield Spread Premium and according to the government is responsible for homeowners in the United States overpaying sixteen billion dollars this year alone. How do you recognize Yield Spread Premium when refinancing your home mortgage loan? You won’t typically find it listed on your Good Faith Estimate because this document is little more than a marketing tool used to sell loans.

Your first opportunity to spot Yield Spread Premium when refinancing your home is when you lock in your mortgage rate and receive written confirmation from the lender. This confirmation must come from the lender and not your mortgage broker. Many dishonest mortgage brokers type up a rate lock confirmation on their company letterhead and try and pass it off as the lenders; if your mortgage broker does this they are simply trying to hide their markup of your mortgage rate. Many mortgage brokers will simply refuse to show you rate lock confirmation from the lender stating that the information is “proprietary” or “confidential” and that you cannot see it. Again, this is your broker’s boneheaded attempt to hide what they’ve done to your mortgage rate for a commission from the lender.

Why do mortgage lenders pay the broker a bonus for marking up your mortgage rate? Mortgage lenders make the majority of their profits by selling your loan to investors on the secondary market. Lenders know that mortgage loans with above market mortgage rates bring in premium profits. This is why the lender rewards mortgage brokers that overcharge their profits with Yield Spread Premium, often doubling, even tripling their commissions.

You Don’t Have to Overpay for Your Next Mortgage

Ignorance might be blissful but when it comes to your mortgage loan bliss will cost you thousands of dollars in unnecessary mortgage interest. Fortunately, avoiding this unnecessary markup of your mortgage interest rate is easier than you think. You simply have to find the right mortgage broker to refinance your home loan. It is possible to refinance your mortgage paying only a one percent origination fee without Yield Spread Premium from the lender. The trick is finding the right mortgage broker for the job.

How to Find the Right Mortgage Broker

What kind of car does your mortgage broker drive? Is it a Hummer H3 plastered with their company’s logo? I guarantee this broker is not the right person for the job. The ideal mortgage broker is a small time, self-employed broker that does not employ an expensive sales staff or posh office spaces. They most certainly do not drive a company Hummer. Find a self employed mortgage broker that works out of their home? Better Still. These self-employed mortgage brokers will not have the overhead expenses and will be much more likely to cut you a deal that does not include commission based markup of your mortgage rate.

You can learn more about refinancing your mortgage loan without paying junk fees to the lender or broker by registering for the videos found on this website. Register today and you’ll have immediate, online access to the videos and training materials that will show you step-by-step how to get the best deal on your next home loan.

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Mortgage Refinancing for Dummies

Robert — Tue, 02 Dec 2008 22:48:10 +0000

Refinancing your home loan allows you to take advantage of low mortgage rates as well as change the terms of your existing mortgage loan.

Before you decide to refinance your existing mortgage it is important to determine how long it will take you to recoup the expenses of refinancing your home loan. Here are several tips to help you decide if mortgage refinancing is right for you.

The process of refinancing is simply taking the balance you owe on your existing mortgage and paying it off with a new mortgage. You may have the opportunity to borrow against your home’s existing equity and get cash back in the process. Keep in mind that there are fees that you will be required to pay and there could be a penalty for paying off your existing loan early. You should examine your existing mortgage contract for a prepayment penalty prior to applying for a new mortgage loan.

Closing costs are the fees you will be required to pay when refinancing and you will encounter many of the same fees you paid when you first purchased your home. There are banks boasting about their “no fee, no closing cost” mortgage loans; however, you should know that you are trading a higher mortgage rate which will drive up your payment amount for these closing costs.

What About Mortgage Points?

Paying “discount” points on your new mortgage allows you a way to buy down your mortgage rate. One point is the equivalent of one percent of your mortgage amount paid at closing. Suppose for instance you are required to pay two points on a $150,000 mortgage, this means you will have to fork over $4,500 at closing to get the interest rate promised to you. Should you pay discount points when refinancing? In most cases no. Mortgage rates are at historically low levels and for most homeowners it doesn’t make sense paying for a mortgage rate that another lender would be willing to give you.

Types and Term Length of Mortgage Loans

Refinancing your home loan gives you the opportunity to change the term length and type of mortgage rate for your loan. Mortgage rates come in three basic varieties: fixed, adjustable, and hybrid. Hybrid mortgage loans are a combination of fixed and adjustable rate mortgages and are best suited for homeowners who only plan on keeping their homes for a short while and want to minimize their risk of payment shock from an Adjustable Rate Mortgage.

Refinancing your existing mortgage means choosing the right type of interest rate, term length, and loan originator for the new loan. Most homeowners overlook the importance of choosing the right person to arrange the new loan as this person sets their fee and commission based markup of your mortgage rate. Choosing the right mortgage broker will make or break your new home loan and could save you thousands of dollars every year you keep the loan.

You can learn more about refinancing your residential mortgage without overpaying by registering for the free mortgage videos featured on this site.

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Mortgage Loan Approval Is Becoming More Difficult

Robert — Mon, 23 Jun 2008 22:29:21 +0000

It is becoming increasingly more difficult to get approved for a mortgage loan even with good credit. Mortgage lenders have been tightening standards for approval due to the credit crunch of late…and the end of the crisis is not yet in sight. Here are several tips to help make sure you qualify if you’re in the market to refinance your home mortgage loan in today’s topsy-turvy mortgage market.

What Mortgage Lenders Consider

Mortgages lenders look at a number of factors to not only approve your loan but assign you a mortgage rate. The top aspects lenders look at are your past credit history and the amount of cash you have; however, the single most important factor is your credit worthiness. If your credit score is below 700 right now your only option could be one of the FHA programs. While FHA loans are great the downside for you is that you will be required to purchase Private Mortgage Insurance (PMI). If you’re not familiar with PMI, this insurance protects the lender and the government from losses if you default on the loan.

The amount you’ll pay for PMI premiums depends on your credit history and can add hundreds of dollars to your monthly payment. While this is certainly a downside of Private Mortgage Insurance, if paying the premiums allows you to keep your home it’s certainly worthwhile.

How to Improve Your Credit Rating

To build a strong credit score you can start by paying down the balances of your credit cards so that you have not used more than half of your available credit. Suppose for example that you have a $5,000 limit on your cards…it is best not to exceed $2,500 in available credit. If you have used more than 50% of your available credit shifting the balances to other cards with less than half of the available credit used could improve your credit rating.

Pay More Than The Minimum Payment

Making the minimum payment every month will not help your financial situation. Set your own payment at least 25% higher than what you are due each month. This will not only improve your credit score but help pay down your balances as paying the card minimum will never get you anywhere. Don’t pay off your balances entirely…you want to show that you can use credit responsibly.

You can learn more about qualifying for a better mortgage and improving your credit score by registering for my free video tutorial.

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Is Your Mortgage Broker a Loser?

Robert — Fri, 13 Jun 2008 19:31:54 +0000

Refinancing your mortgage loan with the wrong broker will cost you thousands of dollars and in today’s economy could even result in the loss of your home.

Remember that mortgage brokers are salespeople and come in multiple shapes in sizes with their own personalities. How can you tell if your mortgage broker is a dud? Here are several tips to help you find the right person to refinance your home mortgage.

Beware Endless Chatter

Like any other salesperson the mortgage broker that talks but never listens to you is the wrong person for the job. Dishonest mortgage brokers use never ending banter to distract you from something they may be hiding in your loan contract. Trust your instincts…if your mortgage broker comes across as a sleazy sales type that talks your ear of endlessly without letting you get a word in you should probably find another broker.

Sloppy With Paperwork & Deadlines

Being punctual is essential when it comes to your mortgage loan. If your mortgage broker is sloppy with paperwork it could cost you money. If your mortgage broker tells they will call you at a certain time and does not keep their appointments consider this a bad sign and move on to another mortgage broker.

Inexperience Costs You

When shopping for a mortgage broker it’s always a good idea only to work with those who have ten years of experience or more. If your broker has to consult the underwriter or someone else in the office before responding to your questions consider it a lack of experience and move on. Don’t worry about hurting anyone’s feelings…you’re not looking to make friends, you want a better mortgage right?

Good Mortgage Brokers Aren’t Hard to Find

The ideal mortgage broker is one that has a minimum of ten years experience, is self employed, and does not employ a sales staff. Finding a mortgage broker that fits this profile working from home is even better. Why? Mortgage brokers with fancy offices and sales staffs have to pay for their plush offices and the salaries of their sales staff.

This means they are going to be much less likely to negotiate fees and things like Yield Spread Premium on your loan. Remember, you’re paying for that fancy office and the hummer parked outside. You can learn more about refinancing your mortgage without paying too much today by registering for our free video tutorial.

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Mortgage Broker Tricks

How to Refinance Your Home Mortgage Loan

Robert — Tue, 20 May 2008 20:16:38 +0000

There may come a time throughout the life of your home loan in which you decide to refinance or would like to know how to refinance. The more you know about refinancing your mortgage the better off you will be. Here are the steps you will need to take when you are ready to refinance your home loan to make sure it is the right thing for you.

Step One: Do Your Research

Learn as much about refinancing as possible before you begin the process. Basically, when you refinance a home loan it means that you will be receiving a new home loan that will be used to pay off the original mortgage that you owe. This can benefit you in several ways such as lowering your interest rates which will reduce the overall amount that you owe and it can also reduce your monthly payments. In some cases it can even shorten the length of the loan. You should also learn about your credit history because it will be a factor in determining the interest rates you can receive. The better your credit the lower rates you can expect.

Step Two: Compare Mortgage Lenders

Before you choose a lender to use for refinancing you need to take some time to compare different ones to see what they have to offer. You will find that there is a big difference between lenders and comparing these differences will help you make an informed decision. Here are a few of the things that you need to take into consideration. Look at the interest rates and fees that you will be charged for using that specific lender. Carefully consider the terms of the mortgage. Keep in mind that it may be possible for your current lender to offer you a better deal than anyone else so don’t exclude them when comparing lenders.

Step Three: Use Caution

Before you refinance your home loan you need to make sure that you will actually be benefiting yourself in the end. Go over all the details and make sure you know exactly what you will be paying before you accept the new loan. If you will not be saving any money when all is said and done, then it would be pointless to take out the new loan.

Refinancing your home loan can be very beneficial provided you follow the steps above to ensure you receive the best offer possible. You may even be able to borrow a little extra with the new loan that will allow you to do some remodeling or consolidate your higher interest debts and gain a tax deduction.

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Mortgage Broker Secrets

Robert — Sat, 19 Jan 2008 23:13:15 +0000

If you’re considering refinancing your home loan with a mortgage broker there are several things you need to know in order to avoid paying too much. Mortgage brokers can be an excellent resource for finding loan offers you wouldn’t have access to on your own; however, unless you know how to negotiate with mortgage brokers you’ll be refinancing with a mortgage rate that includes commission based markup and unnecessary junk fees.

Here are several tips to help you find the right mortgage broker allowing you to refinance with wholesale mortgage rates while avoiding garbage fees.

What Are Retail Mortgage Rates

The biggest mortgage broker secret today is also the sleaziest. Mortgage brokers take wholesale rates and markup them up to get a commission from the lenders. They do this even though you’re paying them an origination fee for finding you a loan…lining their pockets at your expense. Here’s an example how this commission based markup works.

Suppose you’re refinancing a $250,000 mortgage loan for 30 years at 6.75%. Your mortgage broker charges you an origination fee of 1.25% which means you’ll have to pay $3,125 at closing for your broker’s services. What your mortgage broker isn’t telling you is that you actually qualified for a 6.0% mortgage rate from the lender that approved your application and they’ve secretly marked your rate up to 6.75%. Most mortgage brokers never admit that they’re doing this with your interest rate and if you were to question the markup they would try and explain it away.

Many mortgage brokers go so far as to fabricate rate lock confirmation from the lender to hide what they’re doing with your mortgage rate. If you were to see the actual rate lock from the lender this markup of your interest rate is clearly disclosed. The final opportunity you have to catch your mortgage broker’s dirty little secret is on the HUD-1 statement. The fee your broker receives for overcharging you is disclosed around lines 810-811 of this document; you will often see it called mortgage broker rebate, YSP paid to mortgage broker or Yield Spread Premium.

In the previous example he mortgage broker receives 1% of your loan amount for every quarter percent that they secretly overcharge you. This mortgage broker walked away with $7,500 on top of the $3,125 you’re already paying for their services. That’s $10,625 for a few hours of dishonest work. Don’t be a victim of these mortgage broker secrets…by doing your homework you can avoid this unnecessary markup of your mortgage interest rate and garbage fees like loan processing fees and rate lock fees to name just to name a couple.

You can learn more about refinancing your mortgage with a wholesale rate by registering for a free mortgage video tutorial. The videos will show you not only how to avoid paying too much with unnecessary junk fees and markup of your mortgage interest rate, but how to tune up your credit score before you apply for a new mortgage and get the lowest possible interest rate. Register today while this is still a free offer.

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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.

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How to Refinance a Mortgage

Robert — Tue, 08 Jan 2008 03:15:26 +0000

Many homeowners have a difficult time choosing which type of loan is best when refinancing their homes. Taking out a new 30 year fixed rate cookie cutter mortgage every time you refinance may not be the best move for your situation. Here are several tips to help you make sense of the different mortgage products available and choose the right loan for your situation.

How Long Do You Plan on Keeping Your Home?

The first question you need to answer when deciding to refinance is how long you plan on keeping your home. Because there are expenses involved when taking out a new mortgage loan you will need time to recoup this money. If you sell your home prior to recouping this expense you will lose money by taking out a new loan. You can easily determine your breakeven point by dividing the amount you will pay in fees and closings costs by how much lower your monthly payment will be. This will tell you the number of months it will take to recoup your refinancing expenses with the lower payment amount.

What Interest Rate And Term Length Should You Choose?

Choosing a 30 year fixed rate loan when refinancing is not a good idea for most homeowners. Refinancing your mortgage with a 15 year loan allows you to build equity in your home at a much faster rate. Choosing an adjustable rate loan could allow you to take advantage of lower mortgage rates. Mortgage interest rates are still very low; however, you should weigh your tolerance for financial risk before choosing a mortgage with a variable interest rate.

What Are Your Objectives For The New Mortgage Loan?

Do you need a loan with the lowest possible payment or would you like to pay the mortgage off as quickly as possible? If you can tolerate a fair amount of financial risk and need the lowest possible payment an interest only adjustable rate mortgage could be right for you. Interest only mortgages have payments based only on the amount of interest due in a given month; however, these mortgages do not remain interest only forever. At the end of the interest only period your lender will recast your loan to a standard Adjustable Rate Mortgage amortized for the time remaining in your loan term

Amortized? What Does That Mean?

Amortization is just a fancy word for describing how your mortgage balance is paid down over time. Mortgage loans are front loaded with interest so at the beginning of your loan the majority of your mortgage payment is applied to the finance charges. Over time this reverses as the interest is paid down and more of your payment is applied to the loan balance. Because mortgage loans are front loaded in this manner it is best for you to find the lowest rate possible when refinancing. You can do this by avoiding broker markup of your mortgage rate and other garbage fees.

You can learn more about how to refinance a mortgage by registering for our free video tutorial. The videos are yours free and will show you how to save thousands of dollars refinancing your home with a wholesale mortgage rate while avoiding garbage fees.

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How to Refinance With a Wholesale Mortgage Rate

Robert — Fri, 04 Jan 2008 22:59:05 +0000

Refinancing your mortgage with a wholesale mortgage rate can save you thousands of dollars in unnecessary finance charges. By doing your homework before refinancing you will not only learn how to take advantage of the wholesale nature of mortgage interest rates, but learn how to avoid the junk fees added by your broker and lender. Here are several tips to help save you money when refinancing your home mortgage loan.

What are Wholesale Mortgage Rates?

Wholesale mortgage rates are offered exclusively by wholesale lenders. You will never get a wholesale rate form a bank or credit union and the only way to get them is to find a mortgage broker willing to let you. The problem with mortgage brokers is that one of they ways they are compensated for their services is by marking up your interest rate for a commission. This broker added markup is what makes mortgage rates “retail” and is called Yield Spread Premium.

How to Avoid Yield Spread Premium

How do you find a mortgage broker that won’t markup your mortgage interest rate? Yield Spread Premium is a significant part of most brokers’ income; eliminate this and they’re only working for the origination fee you agree to pay them. One of the biggest problems with Yield Spread Premium today is that the fee is not properly disclosed. When questioned about this markup most brokers try and explain the fee away or simply tell you that because it’s not being paid out of your pocket you shouldn’t worry about it.

Every single mortgage broker you encounter when refinancing your mortgage loan knows about Yield Spread Premium and makes an income from it; however, if you agree to a mortgage with this markup you’ll pay thousands of dollars in unnecessary finance charges. There are mortgage brokers willing to work for a reasonable origination fee without marking up your mortgage rate. Many of these brokers belong to a professional organization known as the “Upfront Mortgage Brokers Association.” Members of this professional association agree to conduct themselves adhering to certain professional and ethical standards….meaning they will not mark up your mortgage rate for a commission and hide the fact that they’re doing it.

The Upfront Mortgage Brokers Association maintains a registry of its members categorized by State on its website. You can search for a member in your state by visiting http://www.upfrontmortgagebrokers.org. If you’re living in a State that doesn’t have any members you can still take advantage of wholesale mortgage rates; however, you’ll have to do some negotiating to find the right broker.

Beware Mortgage Broker Junk Fees

In addition to Yield Spread Premium, there are a number of junk fees you’ll need to keep an eye out for when refinancing. If you find anything on your Good Faith Estimate or HUD-1 statement that resembles a “Broker Courier Fee,” “Rate Lock Fee,” Loan Processing Fee,” or “Application Fee” you should question your mortgage broker as to the validity of these charges. The “Rate Lock Fee” is a perfect example of a garbage fee invented by your mortgage broker. No mortgage lender charges a fee for locking in your interest rate; if you find a rate lock fee in your loan documents this fee has been fabricated by your broker and will go straight into their pocket.

You can learn more about refinancing your mortgage with a wholesale interest rate while avoiding ridiculous garbage fees by registering for a free mortgage DVD. Register today; you’ll get immediate access to the membership area and all of the training materials that will save you thousands of dollars on your next mortgage loan.

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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.

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How to Refinance Your Second Mortgage Loan

Robert — Sat, 17 Nov 2007 21:12:20 +0000

If you are a homeowner struggling with the payments for your second mortgage loan, low mortgage rates could help you take back your budget by combining your first and second mortgage into one payment. When your home is secured by only one loan you will qualify for a lower mortgage rate which could result in a lower, more manageable payment. Here are several tips to help you decide if now is the right time to refinance and combine your higher interest mortgage loans.

Why Consider Mortgage Refinancing?

The obvious benefit of mortgage refinancing is that you will have only one monthly payment to manage, a lower mortgage rate, and a payment that could be much lower than what you’re currently paying. If you’re interested in paying down your mortgage more quickly you have the option of shortening the term length of your new mortgage, allowing you to pay more towards the principle balance of your loan. Paying more towards your loan balance will save you money in the long run by paying less in finance charges over the lifetime of your mortgage.

Consider the Cost of Refinancing a Second Mortgage

Whenever you take out a new mortgage loan you will be required to pay fees for securing the loan. These fees can include an appraisal, title search, application fees, processing fees, and various third party closing costs. If you are consolidating your second mortgage you should have no problem recouping theses expenses based on your potential savings; however, it is still important to shop around compare loan offers. You can also save yourself a lot of money by dong your homework and learning how to negotiate for a wholesale mortgage rate.

What are Wholesale Mortgage Rates?

There are two kinds of mortgage interest rates available on the market today. There are the retail mortgage rates that include commission based markup offered to the majority of homeowners today, and wholesale rates offered to those that know how to avoid this incentive based markup. This markup of your mortgage interest rate is known as Yield Spread Premium and agreeing to a mortgage that includes it results in overpaying thousands of dollars unnecessarily.

What is Yield Spread Premium?

Simply put, Yield Spread Premium is the unnecessary markup of your mortgage interest rate to get a commission from the wholesale lender behind your loan. For every quarter percent you unknowingly agree to overpay, your broker receives a bonus of one percent of your loan amount. This kickback to the broker is paid in addition the origination fees you are already paying for the mortgage broker’s work.

Consolidate Your Second Mortgage with a Wholesale Mortgage Rate

By consolidating your first and second mortgage loans with a wholesale rate and avoiding junk fees you can save yourself thousands of dollars. If you would like more information on how to refinance your second mortgage, register for a free video guide.

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