Mortgage Refinance Guide

Mortgage loans can be very confusing and there is an abundance of bad advice available on the Internet. Much of the mortgage information you find online is sales motivated and if you’re not careful you could wind up paying thousands of dollars unnecessarily. This is why doing your homework and carefully researching mortgage offers is important before applying for a new loan.

Doing your homework means more than simply comparing loan offers and choosing the loan with the lowest mortgage rate. You’ll need to negotiate with the mortgage companies you request quotes from to avoid paying Yield Spread Premium. This markup will cost you thousands of dollars in unnecessary mortgage interest each year if you accept a loan that includes this markup.

What is Yield Spread Premium? This is the markup your loan representative adds to your interest rate to boost their commission, often without telling you. Here is an example of how Yield Spread Premium works: suppose you are refinancing with a $300,000 loan using a mortgage broker. Your broker tells you that you qualify for a 6.5% mortgage rate and charges you 1.0% for the loan origination fees. What your mortgage broker isn’t telling you is that the lender approved you for 6.0% mortgage rate and they marked it up to receive a 2.0% bonus from that lender. The difference between the 6.0% mortgage rate you qualified and the 6.5% rate that you closed is Yield Spread Premium.

Once you understand how Yield Spread Premium works you can negotiate to avoid paying it. Tell your potential mortgage brokers that you will not accept this markup with your loan. Tell them you will pay a reasonable origination fee and all necessary closing costs; however, will not pay any amount of Yield Spread Premium. You can learn more about refinancing your mortgage without paying too much with our free mortgage video tutorial.

If you’re considering refinancing your mortgage in the State of Colorado, finding the right person to originate your mortgage loan can save you thousands of dollars and many future headaches. Robert Blake is a licensed mortgage broker in the State of Colorado and is fairly outspoken against Yield Spread Premium and bank mortgage loans on his Blog “The Mortgage Insider.”

If you’ve watched the free video tutorial available on this site, you know that Yield Spread Premium is the unnecessary markup of your mortgage interest rate by the loan originator to boost their commission. This markup could be subtle, as little as a quarter percent; however, if you unknowingly agree to pay it you’ll spend thousands of dollars in unnecessary mortgage interest. As for banks, bank originated mortgage loans are just plain evil. Banks mark up their mortgage interest rates to make a profit by selling your loan on the secondary market and are not legally required to tell you that they’re doing this.

If you’re in the market for a new mortgage loan in Colorado, a good mortgage broker can be an excellent resource for securing loan offers you might not find shopping on your own. Finding an honest mortgage broker can be a difficult task as these individuals are almost always paid by commission. The mortgage that gives them the largest commission may not be the best loan for your situation; this is why it is important to do your homework before refinancing your mortgage.

So if you’re refinancing your mortgage in Colorado, check out Robert Blake’s mortgage Blog “The Mortgage Insider,” and tell him you won’t stand for Yield Spread Premium.