September 18, 2008
If you are refinancing your home loan, the mortgage rate you receive is one of the most important aspect of your loan. One of the most important aspects of your refinancing mortgage rates is whether or not the person arranging your loan is generating a commission for them self by marking up your mortgage rate. Here are the basics you need to know about mortgage rates when refinancing your mortgage to avoid paying too much.
Mortgage Rates, also referred to as the “Note Rate” is an amount of interest paid to the lender expressed as a percentage of the loan amount
Mortgage rates are the most familiar aspect of refinancing; however, the overwhelming majority of homeowners do not understand how mortgage rates work. In fact, this is so bad in the United States that the Secretary of Housing and Urban Development recently announced that American homeowners will overpay nearly sixteen billion dollars this year alone!
Because your mortgage rate is the means to a better commission by the person arranging the loan most people never get the mortgage rate they deserve. You can refinance with mortgage rates you deserve by investing a little time doing your homework and learning about something called Yield Spread Premium.
Yield Spread Premium and Your Mortgage Rates
The commission paid by a wholesale lender to the person arranging your mortgage is known as Yield Spread Premium. This fee is paid in addition to any origination fees you are already paying, probably even overpaying, for this person’s services in arranging your home loan.
Yield Spread Premium is paid at one percent of your loan amount for every quarter percent your refinancing mortgage rate is marked up. The problem with this markup is that it artificially inflates your monthly payment. To learn more about avoiding this unnecessary inflation of your mortgage payment and other junk fees when refinancing, register for the free videos available on this web site.
Technorati Tags: Add new tag, home mortgage refinancing, mortgage terminology, refinancing-mortgage-rates, yield-spread-premium
March 14, 2008
Mortgage rate locking can be a source of confusion for many homeowners. Lock at the wrong time and you could miss out on a good rate…fail to close before the lock expires and you could miss your rate all together. Locking your mortgage rate when refinancing is more important than you think; your rate lock confirmation provides you key information regarding your mortgage rate. Here are the basics you need to know about locking your mortgage rate when refinancing to avoid paying too much for your next mortgage loan.
Mortgage Rates Are Constantly Changing
Mortgage rates tend to fluctuate on a daily and sometimes hourly basis. If you miss locking your refinancing mortgage rate today, it will not be the same tomorrow. Your mortgage broker has to re-price your loan on a near daily basis. Before you can understand the importance of your mortgage rate lock confirmation you need to understand how your mortgage broker is paid for their work.
Brokers get paid by charging you:
Origination Fees
Mortgage Broker Fee
Yield Spread Premium
The origination and mortgage broker fees are pretty straight forward but often over-inflated. Yield Spread Premium on the other hand will be cleverly disguised in your loan documents if disclosed at all. In the simplest terms Yield Spread Premium is simply a percentage of your loan amount created by the broker when they lock and close your mortgage with above market rates. This is a commission paid by the lender when your mortgage broker overcharges you.
If you plan on staying in your home for the long term it makes sense to pay an origination fee and avoid Yield Spread Premium completely. If you agree to pay any amount of Yield Spread Premium on your loan you could overpay thousands of dollars every year that you keep the loan. The problem is most homeowners don’t know how to recognize Yield Spread Premium on their loan documents. This is where the rate lock confirmation comes in…this one piece of paper could save you thousands of dollars.
Ask For Your Rate Lock Confirmation
After you lock in your mortgage rate, make sure you ask the broker for the rate lock confirmation from the wholesale lender. Don’t accept any confirmation typed up on your mortgage broker’s letterhead, it has to come from the lender directly. The reason you don’t’ want this document from the broker is that it will have Yield Spread Premium clearly disclosed on the form…mortgage brokers that provide rate locks on their own letterhead do so to hide what they’ve done with your mortgage rate. You can learn more about refinancing your mortgage with a wholesale mortgage rate without paying too much by registering for my free video tutorial.
Technorati Tags: refinancing, refinancing-mortgage-rates
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