Home Mortgage Refinancing Guide

If you are in the process of refinancing your home mortgage loan, getting a good deal from a reputable lender is probably at the top of your to-do list. The mortgage industry has suffered a major setback in the United States recently with lenders tightening their standards and cutting corners on loan offerings.

In the midst of the so-called “credit crisis” how can you be sure that you’re getting a good deal on your mortgage rate and aren’t paying garbage fees to the broker or lender? Here are several tips to help you find the lowest refinance mortgage rates for your home loan when refinancing.

Understanding Mortgage Rates

Mortgage shopping for most people involves collecting rate quotes from a few online lenders or calling a broker out of the phone book. Some people ask for a Good Faith Estimate and compare fees; however, very few people actually understand how mortgage rates are quoted and nearly everyone pays too much for their home loans. What most people don’t understand is the “retail” nature of mortgage interest rates.

Mortgage lenders operate their businesses on a wholesale basis. They do not lend directly to the public but rely on mortgage brokers to resell their loans. There is one exception; nearly every wholesale lender operates a retail division. You might think that you can avoid retail markup on your loan by contacting the lender directly and skipping the mortgage broker…if you try this you’ll be dealing with their retail operation and paying the same markup of your mortgage rate.

Mortgage Refinance Rates

Why are mortgage rates marked up? Like any other retail mortgage refinance rates have been marked up to give a commission to the broker arranging the loan. This markup is called Yield Spread Premium. Understand how Yield Spread Premium works and you can save yourself as much as several thousand dollars every year that you keep the loan.

How does Yield Spread Premium work? When your mortgage broker submitted your loan application they “mark up” your mortgage rate higher than the lender is willing to approve you to get a commission. Your mortgage broker might be telling you that you qualified for a 6.75% mortgage rate; however, what there not telling you is that you could have been approved at 6.25%. The broker marked up your mortgage rate by .50% because the lender pays them a bonus of 1% for every .25% they overcharge you. On a $250,000 loan that bonus is $5,000 on top of whatever origination fee you agree to pay for their services.

What does this .5% markup mean for your monthly payment amount? If you had refinanced with the mortgage rate you deserve at 6.25% your monthly payment would be approximately $1500 on a 30 year fixed rate mortgage. Dial that up to 6.5% and you’re paying an extra $960 every year just to give your mortgage broker a bonus.

There is good news for homeowners that do their homework before refinancing. You can avoid paying this unnecessary markup of your mortgage interest rate without paying junk fees to the lender and broker with my free mortgage refinancing system. Register today and you’ll get immediate online access to the videos, a list of recommended brokers in your area and everything you need to secure the lowest possible rate when refinancing your home loan.

You may have found this site searching for information on current FHA rates. Finding out about government programs to refinance your home can be confusing, especially if you don’t know where to start. FHA programs are government insured loans; there are no set FHA mortgage rates…finding an accurate source for rate information becomes more difficult because mortgage rates are almost never what they seem. Here are several tips to help you refinance your home loan without being taken advantage of by the lender.

FHA Mortgage Rates

If you qualify for an FHA loan to refinance your mortgage the rate you qualify for is set by the lender behind your loan. Because FHA loans are backed by the government you’ll be required to purchase Private Mortgage Insurance to protect the lender and government from loss if you default on the loan. What you might not know is that the mortgage rate you’re approved includes markup by the person arranging your loan for a commission. This commission is called Yield Spread Premium and could raise your monthly payment by several hundred dollars unless you know how to avoid it.

Yield Spread Premium & FHA Mortgage Rates

To get an FHA mortgage you’ll need to find someone to arrange the loan for you. This person could be a mortgage company or broker and with the exception of FHA streamline refinancing you’ll be required to pay closing costs and other fees for the loan. What you shouldn’t get stuck paying are the hidden costs created by Yield Spread Premium. FHA loans are no different from conventional loans in the way that they arranged…understanding how the person arranging your loan is paid will help you avoid paying too much when refinancing.

Yield Spread Premium is the commission the person arranging your loan receives for marking up your mortgage rate. When your FHA loan was approved the lender approved you for a certain mortgage rate. The broker marks this rate up because the lender pays them a bonus of 1% of your loan amount for every .25% they markup your rate. This markup is paid in addition to any fees you’re already paying for loan origination.

It is possible to refinance your home with an FHA backed mortgage without paying for Yield Spread Premium. There are brokers willing to work for a 1% origination fee without marking up your rate. You can learn more about finding the right mortgage broker without paying junk fees or unnecessary markup by registering for my free video tutorial. Register today; the videos are yours with no obligation.

If you are in the market to refinance your home loan and came to this site looking for information about mortgage lenders, there are several things you need to know to avoid paying too much for your next mortgage loan. The first thing you need to know is that with the exception of bank originated mortgage loans, home loans in the United States are retail products and therefore you will pay retail markup by the person arranging your loan.

You might think “I’ll just go to a bank to avoid this markup…” However, because banks fund their loans with their own money they are exempt from legislation in the United States that required mortgage lenders to disclose their markup making it impossible for you to get the best deal possible from your bank. Here are several tips to help you find the best information about mortgage lenders and save thousands of dollars on your next mortgage loan.

Mortgage Rate Markup

It’s a little known fact in the United States that mortgage loans are marked up by the person arranging the loan for a commission. In the Industry the commission on this markup is called Yield Spread Premium and many brokers conveniently leave the markup off their Good Faith Estimates when quoting you a loan. Mortgage Brokers are required by the Real Estate Settlement Procedures Act to disclose their markup on the HUD-1 Settlement Statement; however, many brokers have clever ways of hiding this markup and the commission the lender pays them.

Yield Spread Premium 101

Suppose you are refinancing your home for $275,000. The broker quotes you a mortgage rate of 6.75% and charges you an origination fee of 2.5% for the loan. The origination fee is what the broker discloses as their fee for arranging your loan and in this case you’ll be charged $6,875 at closing. It’s not uncommon for mortgage brokers to charge as much as 3-4% for the origination fee which if you follow the system found in the free videos on this site you can refinance your home for a flat 1% origination fee. What the mortgage broke isn’t telling you is that your lender actually approved you for a 6.25% interest rate and they’ve marked it up to 6.75% for their commission.

Mortgage lenders pay brokers one percent of your loan amount for every .25% they overcharge you on the mortgage rate. That’s right; in this example the broker pockets an additional 2% of your loan amount for overcharging you. You’re already paying the broker $6,875 for arranging your loan, but the broker pockets another $5,500 at your expense. You get stuck paying $173 more every month in this example just to pay for the mortgage broker’s “extra commission.”

The Best Information About Mortgage Lenders Is Free

The good news for you is that you can avoid this unnecessary markup of your mortgage rate and get the monthly payment that you deserve. The free videos provided on this website show you how to refinance your home loan without paying commission based markup with a flat 1% origination fee. You’ll save thousands of dollars each and every year that you keep the loan. Register today…the videos are yours fee with no strings attached.

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.