Home Mortgage Refinancing Guide

If you’re in the process of refinancing your mortgage loan researching current mortgage rates won’t save you a dime unless you fully understand how mortgage rates are quoted. The rate quotes you collect on the Internet and by calling around from the yellow pages are retail quotes that include commission based markup. If you want the lowest possible mortgage rate when refinancing your home you’ll need to find wholesale mortgage rates. Here are several tips to help you research current mortgage rates from wholesale sources.

Understanding Mortgage Rate Quotes

In order to accurately quote an interest rate the mortgage lender needs sixteen pieces of information about your finances. If you’re working with a mortgage broker that quotes you mortgage rates without requesting detailed information about your finances this broker has no intention of honoring whatever mortgage rate they quote you. This is a bait and switch tactic employed by many shady brokers trying to push expensive loans with above market interest rates.

What You Need to Know About Yield Spread Premium

The second thing you need to know about current mortgage rates is that the quotes you receive include so called “retail markup.” Yield Spread Premium is a bonus paid to your mortgage company or broker for making up the wholesale rate the lender approved you. Lenders pay this commission because mortgage loans with above market rates sell like hotcakes to investors on the secondary mortgage market. Lenders can afford this incentive for overcharging you because it brings in a significant amount of profit for them.

Here’s how Yield Spread Premium works. Suppose your broker quotes you a current mortgage rate of 6.75 percent on a $250,000 fixed rate loan. Your broker charges you an origination fee of one percent or $2,500, which is a reasonable fee to pay for their services. Most homeowners would jump at a loan like this without thinking; however, it’s what you don’t know that will cost you thousands of dollars unnecessarily.

In this refinancing example, what your mortgage broke isn’t telling you is that you actually qualified for a current mortgage rate of 6.0 percent! The broker marked it up to 6.75 percent because the lender pays them an additional point (one percent of your loan amount or $2500 in this example) for every quarter percent they overcharging you. If you agree to this loan the lender pays your mortgage broker three points, or $7500 on top of the $2500 you’ve already paid them. Your mortgage broker walks away from the table with $10,000 for just a few hours work. Despite this ridiculous commission you might be wondering why you should care about this mortgage broker rebate paid by the lender.

If the money isn’t coming out of your pocket why should you care what the lender pays your broker? The problem with Yield Spread Premium doesn’t come from the fact that the lender is paying the fee, it comes from the reason this fee is being paid. Most mortgage brokers will never admit that they’ve marked up your mortgage rate to get a kickback from the lender; in fact, many become angry and defensive if you bring up the subject with them. The real problem is that your broker is marking your rate up behind your back without properly disclosing what they’re doing. Many mortgage brokers go so far as to forge rate lock confirmation documents to hide what they’ve done with your interest rate.

How to Recognize Yield Spread Premium

There are two documents you receive in the process of refinancing that disclose Yield Spread Premium. The first is your rate lock confirmation provided by the lender. This is not a document typed up by your mortgage broker “locking” your mortgage interest rate. If you get any kind of rate lock guarantee from the broker that did not come from the lender (written on your broker’s letterhead for example) then you have not locked in your mortgage rate. Make sure that you get written confirmation of the lock from the lender. This document will have any Yield Spread Premium clearly disclosed on it. If your mortgage broker stalls or refuses to provide this document from the lender you know what they’re hiding and cannot be trusted.

The second opportunity you’ll have to document Yield Spread Premium associated with your mortgage is the HUD 1 statement. Make sure you get this document at least 24 hours prior to signing your contract. It will fully disclose all of the fees and markup and needs to be gone over with a fine toothed comb before you sign anything. If Yield Spread Premium is a part of your new mortgage you will find this disclosed around lines 810-11. It may be listed as Yield Spread Premium, Mortgage Broker Rebate, or YSP paid to broker. The amount listed is in dollars; you might be shocked at the number you find there.

Fortunately you can avoid Yield Spread Premium when refinancing your home. Doing this allows you to take advantage of wholesale mortgage rates and save yourself thousands of dollars. You can learn more about finding current mortgage rates that do not include mortgage broker markup by registering for a free mortgage DVD.

If you’re a homeowner you need to watch this free DVD; it could save you thousands of dollars and countless mortgage headaches.

Register today, this DVD is yours free with no obligation.

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.

If you are considering refinancing your mortgage with a nationwide home mortgage loan company, there are several things you need to know about the junk fees you’ll be paying. Nationwide mortgage companies like Countrywide are notorious for overcharging and taking advantage of their borrowers. Here are several tips to help you avoid paying too much for your next mortgage loan.

Nationwide Home Mortgage Loan Junk Fees

If you’re using the Internet for your mortgage search you’ll need to watch out for “Computerized Loan Origination Fees.” These are fees passed on to you by a third party website such as Lending Tree for simply filling out a form on their website. This fee is frequently buried in the fine print and if you’re not careful you could be out of pocket for as much as $1300 unnecessarily. How does mortgage scam work?

Computerized loan origination fees are charged by websites engaged in lead generation. Lending Tree is one of the most notorious lead generation sites and had a class action law suite pending from 2006 for unfair business practices. These websites like lending tree actually have nothing to do with mortgage loans. They put up a fancy website, spend a small fortune advertising on television collecting your personal information, and sell it to the highest bidder.

While lead generation isn’t necessarily bad, in Lending Tree’s case it’s what they’re not telling you that will cost you money. Lending Tree claims there is no fee for using their service; however, if you read the fine print on their Licenses and Disclosure page you’ll find out that if you take out a mortgage from one of the lenders in their “network” you will have a fee on your Good Faith Estimate of up to $1300. This “Computerized Loan Origination Fee” is paid by the lender out of your pocket to Lending Tree for their part in “arranging” your mortgage.

On one hand you have Lending Tree claiming there is no fee for using their website; however, you’ll have to pay the lender this unnecessary fee because you filled out a form on Lending Tree’s website. This “little white lie” could cost you $1300! This is but one reason why choosing a nationwide home mortgage loan company might not be a smart move.

Beware Yield Spread Premium

Another thing you have to watch out for when taking out a mortgage loan is Yield Spread Premium (YSP). Never heard of it before? Most homeowners haven’t and what’s more according to the Secretary of Housing and Urban Development Yield Spread Premium will cost American homeowners $16 billion dollars this year alone. So what is YSP?

Simply put, Yield Spread Premium is the markup of your mortgage rate for a commission. This markup is what makes mortgage rates “retail.” When your mortgage broker quotes you an interest rate they base a proper quote on sixteen pieces of you financial information, including their commission based markup. Your mortgage broker knows the rate you qualify from the wholesale lender; however, they mark this mortgage rate up because the lender pays them a bonus for overcharging you. The broker receives one percent of your mortgage amount for every quarter percent they overcharge you. This bonus is paid in addition to the perfectly reasonable origination fee you are paying for their services. If you agree to pay this unnecessary markup you are effectively doubling, even tripling your mortgage broker’s commission for your loan.

The good news is that garbage fees and Yield Spread Premium can be avoided when taking out a mortgage loan. You can refinance your home with a wholesale mortgage rate without paying too much at closing. To learn more about avoiding YSP and other garbage fees charged by Nationwide Home Mortgage Loan Companies, register for a free mortgage DVD. Request yours today, the DVD is free with no obligation.