Refinancing Home Mortgage, Avoid the Traps, Get Expert Advice » wholesale mortgage rates

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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How Are Mortgage Rates Determined?

Robert — Thu, 12 Nov 2009 01:29:00 +0000

Are you considering a new mortgage loan for your home but want an answer to the question how are mortgage rates determined before refinancing? It might surprise you to find out that mortgage rates have less to do with your credit score and more to do with how greedy the person arranging your home loan is; however, it’s true. Here’s what nearly every mortgage broker in the business hopes you don’t know about your question “how are mortgage rates determined…”

How Are Mortgage Rates Determined Anyhow?

Assuming you have the minimum credit score necessary to qualify for a traditional mortgage loan and meet the loan requirements as far as equity the mortgage rate you get has nothing to do with your credit and everything to do with the person arranging your loan. Your mortgage rate is also determined by the type of mortgage loan originator that you choose. The loan originator is the person arranging your loan: it could be a mortgage company, mortgage banker, or a mortgage broker. Different loan originators are compensated for your home loan in different ways.

Choose a bank to refinance your home loan and you’ll get a mortgage rate that’s been marked up to create a profit for the bank in the form of Service Release Premium. Banks make the majority of their profits from home loans that they close with higher than market mortgage rates when the loans are sold to investors on the secondary market. This “extra” profit is called Service Release Premium and is similar to the Yield Spread Premium that other mortgage companies and brokers collect from lenders when they close home loans with higher than necessary rates.

What kind of mortgage rate should you shop for when refinancing your home? What you want is a wholesale mortgage rate which in the business is called a “par” mortgage rate. Par mortgage rates are simply mortgage rates that you don’t have to pay points to qualify for and do not create Service Release Premium or Yield Spread Premium for whoever arranges your loan. Getting a par mortgage rate for your home isn’t as difficult as you might think…you don’t have to be a financial “guru”…you just have to find the right person to arrange your next home loan.

Understanding Mortgage Rate Sheets

Your mortgage broker probably won’t give you an honest answer to the question “How Are Mortgage Rates Determined” nor will they show the mortgage rate sheets they’re quoting you from. The reason for this is because the rate sheets they get from wholesale lenders quote that lender’s rates with varying degrees of Yield Spread Premium. The broker quotes you a mortgage rate based on what they think you’ll be willing to overpay for the mortgage loan. Sound like a used car salesman? That’s really all most mortgage brokers are…used car salesman taking advantage of their customers with Yield Spread Premium.

Mortgage Yield Spread Premium

How does Yield Spread Premium work? For every .25% that you agree to overpay for your home loan the wholesale lender pays your mortgage broker 1% of your loan amount. This is paid on top of the origination fee and any junk fees you agree to pay. Not coincidentally, nearly all of the junk fees you find in mortgage offers today come from the mortgage broker, not the lender. Our friend the used car salesman rears his ugly head once again as a mortgage broker. How can you avoid Yield Spread Premium when refinancing your home loan and walk away with a par mortgage rate?

You can do this by finding the right mortgage broker for the job. Banks and credit unions simply do not give par mortgage rates to their customers and most mortgage companies are simply unable or unwilling to give you a par mortgage rate. You’ve got to work with a mortgage broker if you want the lowest possible mortgage rate. Finding the right mortgage broker for the job isn’t hard either. Look for small-time, self employed mortgage brokers. Find one that works out of their home? Even better.

These small-time mortgage brokers don’t have the expensive overhead or ridiculous company hummers and will be much more likely to negotiate the kind of deal you’re looking for that doesn’t include Yield Spread Premium.

You can learn more about answering the question how are mortgage rates determined for yourself without paying unnecessary fees by checking out my free Underground Mortgage Refinancing Videos.

Here’s a sample you need to know about this unnecessary markup of your mortgage rate for kickback from the lender known as Yield Spread Premium. Register for these mortgage videos today while this is still a free offer.

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Today’s Mortgage Rates Refinance

Robert — Fri, 06 Feb 2009 20:01:58 +0000

Are you in the market to refinance your home mortgage and are searching for today’s mortgage rates? Before you do anything there are several things you need to know about the mortgage rate quotes you receive.

Things are not as bad as you have been hearing in the news; however, it is very easy to overpay when refinancing your mortgage. Almost every mortgage quote you come across has someone’s commission built into it. If you’re looking for today’s real mortgage rates for refinancing your home loan here are several tips to help you get a good deal.

Today’s Mortgage Rates Refinancing

If you’re new to this business of mortgage refinancing, the process isn’t much different from what you went through when you purchased your home. You’ll need to find someone to arrange your mortgage for you, usually a mortgage broker that will charge you a fee for their services. Many homeowners think they can skip the middleman by going to their bank for a mortgage loan; however, what the bank isn’t obligated to tell you thanks to a loophole in the Real Estate Settlement Procedures Act is that they are charging you the same markup that most mortgage brokers charge, and probably even more.

How to Find the Right Mortgage Broker

If you want the best deal for your next mortgage loan you’ll need to find a mortgage broker to arrange the loan for you, and not just any broker. Because mortgage brokers work for a commission you don’t want the mortgage broker with the posh office and company hummer. I mean really, how do you think they’re paying for all that bling? They pay for it by overcharging their customer’s mortgage rate…but more on that later.

If you want the best deal the right mortgage broker for your job is a small time self-employed professional, even one working out of their home. These mortgage brokers don’t have the overhead that comes with posh offices and expensive sales staff…not to mention the company hummer plastered with their logo and website.

Mortgage Junk to Avoid

Why do the majority of people overpay when refinancing their mortgages? Simply because they don’t understand how the broker is paid and think that if the lender is paying the fee it’s not coming out of their pocket. Many brokers brag about the fact that their compensation is coming from the lender and even waive their origination fee when refinancing…if anyone who works for a commission starts waiving fees pay very close attention to what they’re shoveling.

What you need to know is not the fact that the mortgage lender is paying this fee for you but why they are paying a fee. Lenders reward mortgage brokers that lock and close loans with above market mortgage rates. If your mortgage broker is receiving a fee from the lender when refinancing it’s because you’re paying a higher mortgage rate than you need to, not that your broker is the “best in the business.” What a load of crap…

It is possible to refinance your home mortgage with a wholesale mortgage rate paying only a one percent origination fee to the mortgage broker. You can find honest mortgage brokers licensed to work in your state that do not mark up mortgage rates for a commission.

You can learn more about refinancing your home mortgage without paying too much by checking out my Underground Mortgage Videos.

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Par Mortgage Rates Definition

Robert — Thu, 01 Jan 2009 21:11:01 +0000

If you are considering refinancing your existing home mortgage loan a par mortgage rate could save you thousands of dollars every year that you have the mortgage. The problem is that all of the mortgage rate quotes you see online and from your local mortgage companies include some markup to create a commission for the loan originator.

Here are the basics you need to know about par mortgage rates to help you get the lowest rate and monthly payment when refinancing your mortgage loan.

A “Par” mortgage rate is one that does not cost money to get or creates cash for the mortgage broker as a commission.

Mortgage rate sheets used by your Mortgage Company or broker are listed on a scale. Going from one side of the rate sheet to the other, the lower the mortgage rate the more you’ll need to pay in “discount points” to get that lower rate. As you move further along the scale there is a point where no points are required. This point on the rate sheet is a “par mortgage rate.” Move further along the rate sheet and you’ll see that mortgage rates higher than “par” creates cash commission in the form of Yield Spread Premium.

Here’s an example to illustrate how mortgage rate sheets quote an interest rate:

5.75% (.5 point required) 5.875% (.25 point required)
6.0% (zero points) Par Mortgage Rate
6.125% (.25% commission created) 6.25% (.5% commission created)

As you can see, 6% is the par mortgage rate of the day. Mortgage rates above 6% create cash for the Mortgage Company or broker while rates below 6% cost you money in the form of discount points. If you want the lowest possible mortgage rate when refinancing you’ll need to get as close to par as possible without creating Yield Spread Premium for the mortgage broker.

How do you get a par mortgage rate? You can get a par mortgage rate by paying a flat 1% origination fee to the person arranging your mortgage loan. Doing this is easier than you think; you just need to find the right mortgage broker for the job.

The free mortgage refinancing videos on this website show you how to get a par mortgage rate while avoiding lender junk fees in the process. Register today and you’ll be on your way to saving thousands of dollars every year on your next mortgage loan.

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Wholesale Mortgage Lenders

Robert — Sun, 28 Dec 2008 20:56:03 +0000

If you’re considering refinancing your home mortgage loan in 2009 and are looking for a wholesale lender there are several things you need to know in order to take advantage of wholesale rates. As a member of the public you cannot simply contact a wholesale lender expecting to refinance your home mortgage with a wholesale mortgage rate.

Here are several tips to help you take advantage of wholesale mortgage rates when refinancing without hidden retail markup of your loan.

What Are Wholesale Mortgage Lenders?

Wholesale mortgage lenders offer loans exclusively through mortgage brokers. Period. You cannot get a wholesale mortgage loan from your bank or credit union no matter what the banker or your neighbor Bob tells you. The reason for this is due to a little know loophole in the Real Estate Settlement Procedures Act that allows banks to hide their markup and profit margin on your loan. Your banker will show you the Bank’s mortgage rate sheets and swear the rates have not been marked up; however, the Banks mortgage rate sheets already include the markup known as Service Release Premium to boost the banks profits when your loan is sold on the secondary market.

What Are Wholesale Mortgage Rates?

Wholesale mortgage rates, also known as par mortgage rates, are interest rates that do not include any Yield Spread Premium or discount points to get them. Yield Spread Premium is a percentage of your loan amount created when the Mortgage Company or broker locks and closes your loan with an above market mortgage rate. This is typically done to create a commission for the broker. Discount Points are a form of prepaid interest due at closing paid to the lender in exchange for a lower mortgage rate. Wholesale mortgage rates include neither Yield Spread Premium nor discount points.

Why Can’t You Just Call Up a Wholesale Lender?

You can certainly call up a wholesale mortgage lender, they all operate retail divisions; however, you will be offered a retail mortgage loan with the same markup as if you had gone through a typical mortgage broker. If banks and wholesale lenders are out of the question how does one go about refinancing with a wholesale mortgage rate? In order to take advantage of wholesale mortgage rates you’ll have to find a mortgage broker willing to work for a flat origination fee without marking up your mortgage rate for Yield Spread Premium.

Finding The Right Mortgage Broker is Easier Than You Think

First, you’ll need to do a little homework learning when and where you can recognize Yield Spread Premium in your loan documents. Second, you’ll need to know how to negotiate with mortgage brokers and where to look for a broker willing to work for a flat origination fee of one percent without marking up your mortgage rate. There are honest mortgage brokers out there willing to work for a flat origination fee of one percent without taking Yield Spread Premium on your loan…you just need to know where to look to find one.

You can learn more about refinancing your home loan with a wholesale mortgage lender by registering for the free mortgage videos on this website. When you register you’ll get a list of mortgage brokers in your area that do not work for Yield Spread Premium and learn how to recognize and avoid lender junk fees.

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Internet Mortgage Lenders

Robert — Fri, 26 Dec 2008 23:32:14 +0000

Considering Internet Mortgage Lenders to refinance your existing home loan? The Internet is an excellent tool for comparing loan offers; however, there are a number of hidden fees that could quickly turn that sweet Internet mortgage rate quote into a financial nightmare.

Here are several tips to help you find the right Internet Mortgage Lenders without paying junk fees or markup of your mortgage rate.

What Are Internet Mortgage Lenders?

Most websites you find on the Internet fall into one of two categories: lead generation and broker banks. The Internet giants like Lending Tree involved with lead generation actually have nothing to do with mortgage loans whatsoever. You might be surprised to learn that all Lending Tree does is run a glorified lead generation site with an enormous advertising budget. That’s right, all Lending Tree does is collect your contact information and financial details and sell your information to the lenders and brokers in their “network” for a premium fee.

Beware Computerized Origination Fees

Did you know that if you refinance your mortgage with one of the lenders in Lending Tree’s network you will be charged a “computerized loan origination fee” of up to $1200 on your Good Faith Estimate? This is how mortgage companies and brokers pass Lending Trees lead generation fees on to you the consumer. Should you have to pay this ridiculous junk fee just so Lending Tree can turn an enormous profit? Of course not. There are hundreds of honest and hardworking mortgage brokers in every market willing to work for a fair loan origination fee without marking up your mortgage rate for fun and profit.

What About Mortgage Broker Banks?

Mortgage broker banks are another evil most homeowners are not familiar with. The Banking Lobby in the United States spent millions of dollars lobbying congress to be exempt from the Real Estate Settlement Procedures Act which requires mortgage brokers to disclose their markup and profit margin on your home loan. Because banks are exempt from this legislation and fund their loans with the bank’s money you’ll never know the bank’s margin on your loan or how much they’ve marked the rate up over a par or wholesale mortgage rate.

Mortgage broker banks were created to take advantage of the loophole in the Real Estate Settlement Procedure Act and are simply a mortgage company or broker that closes and funds loan in its own name. eLoan is an example of an Internet Mortgage Lender that closes in its own name and is therefore not required to disclose how much they’ve marked up your mortgage rate for a profit. Take out a mortgage loan from a mortgage broker bank and you’ll never know how low your mortgage rate could have been…

How to Avoid Mortgage Broker Banks

Broker banks are easy to avoid when refinancing your mortgage. Simply ask your mortgage broker or loan representative if their company closes in the name of the wholesale lender or their own company. If they close in their own name you know you are dealing with a broker bank. There is only one reason for a mortgage company to operate as a mortgage broker bank and that is to take advantage of the loophole created by the banking lobby to exploit homeowners. This is not the type of company or mortgage broker you want to do business with.

Honest Mortgage Brokers Are Not Hard to Find

The ideal mortgage broker is self-employed with at least five to ten years experience. Find one working out of their home? Even better. The reason this makes for the perfect mortgage broker is the small time self-employed brokers do not employ expensive sales staff or pay for posh office spaces. This type of broker is much more likely to give you a good deal without marking up your mortgage rate for a commission. You can learn more about refinancing your mortgage without paying too much by registering for the free videos available on this website. Register today and you’ll receive a list of mortgage brokers in your area that do not mark up mortgage rates for a commission, allowing you to take advantage of wholesale mortgage rates.

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How to Negotiate With Your Mortgage Broker

Robert — Thu, 28 Feb 2008 03:50:31 +0000

If you’re in the process of refinancing your home you can save yourself thousands of dollars by getting a wholesale mortgage rate.

The problem for many homeowners is that that they don’t know how get wholesale rates; most mortgage brokers would simply laugh at you if you told them “give me a wholesale mortgage rate.”

Here are several tips to help you negotiate with mortgage brokers and find the right person to arrange your home loan.

Not Every Mortgage Broker Will Negotiate

The problem with negotiating with a broker is that not all brokers are in a position where they can negotiate. If you’re speaking to a salesperson from a large brokerage house they will probably not have the authority to negotiate for the terms you’re looking for. The reason for this is that the owner of the brokerage will be splitting the commission with the salesperson meaning you’ll always pay more than you have to with a mortgage broker in this situation.

This is also true of mortgage brokers that employ their own salespeople. Suppose for instance, you’re charged a one percent origination fee for your home loan. Your broker pockets this fee and will most often pay the salesperson from the Yield Spread Premium on your loan. Loan offers that don’t have origination fees are making up the difference often by doubling the amount of Yield Spread Premium on your loan. If you want a wholesale mortgage rate and plan on keeping your home for a long time you’ll need to avoid Yield Spread Premium completely.

If you’re not already familiar with this retail markup of your mortgage rate for a commission here is an article about the basics of Yield Spread Premium.

Self Employed Mortgage Brokers Are Best

It’s always better to work with the owner of the company you are dealing with. A self-employed mortgage broker that has been working for ten years or longer is the perfect candidate for arranging your mortgage. Working out of their home? Even better. One reason why working with a self employed mortgage broker is better is that they simply don’t have the overhead expenses that come with posh offices and support staff. A self employed mortgage broker is more likely to negotiate with you and agree to your terms for the loan.

What To Ask For When Refinancing Your Mortgage

If you plan on keeping your home for the duration you’ll want to pay a one percent origination fee without any Yield Spread Premium on the loan. Some mortgage brokers argue that paying the origination fee will only raise your closing costs; however, agreeing to a higher mortgage rate that includes Yield Premium will result in a mortgage payment that could be as much hundreds of dollars higher per month than it has to be.

You can learn more about finding the right mortgage broker to arrange your loan by checking out my free Underground Mortgage Videos. Register today and you’ll learn how to refinance with wholesale mortgage rates without paying junk fees to your lender or broker.

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Avoid Broker Banks When Refinancing Your Mortgage

Robert — Wed, 20 Feb 2008 21:50:35 +0000

You might be asking yourself “What the heck is a Broker Bank?” Most people have never heard of broker banks…in fact, prior to 1999 they didn’t exist. Here are the basics that every homeowner needs to know about Mortgage Broker Banks when refinancing a home loan.

Before the Real Estate Settlement Procedures Act was amended to require mortgage brokers to disclose their profit margins made from locking and closing mortgages with above market rates, banks were losing a large portion of their profits to mortgage brokers.

The Banking Lobby decided to do something about this and spent millions of dollars lobbying Congress to have the disclosure laws changed; their goal was to gain an unfair advantage in the marketplace by requiring mortgage brokers to disclose the commission based markup of your mortgage interest rate.

What is a Broker Bank?

The banking lobby succeeded in having the law changed and of course banks are exempt from this new disclosure legislation. This change in the Real Estate Settlement Procedures Act sent mortgage brokers scrambling to take advantage of the same loophole exploited by banks. All a mortgage broker had to do was fund their own loans like a bank which would allow them to close in the name of their company instead of a wholesale lender…hence the Broker Bank was born.

The only reason a mortgage company or broker would choose to operate as a broker bank is to hide their markup of your mortgage interest rate. If you refinance your home with a bank or broker bank you’ll never know mortgage rate you could have had with an honest lender.

How to Recognize a Broker Bank

Banks are easy to spot; however, when it comes to recognizing broker banks things can get a little fuzzy unless you know what to look for. First of all, broker banks love to brag about doing their loans “in house.” The best way to find out if your mortgage broker is acting as a broker bank is to ask if they close in the name of the wholesale lender. If the answer you get is “no” and they are closing in their own companies name then you know with 100% certainty that they are a broker bank and cannot be trusted with your mortgage.

Beware Bank Wholesale Divisions

One of my readers emailed me that she was working with a broker for a loan through Wachovia. Her broker convinced her that this was okay because the lender wasn’t Wachovia directly, but their “wholesale division” known as Vertice. The problem with this logic is that the bank controls their wholesale division and the rate sheets provided to mortgage brokers from Vertice include the markup. On top of this the banks salespeople do not have the authority to negotiate for lower rates. Banks have enormous overhead they must cover and rely on overcharging to make a profit. This is true of every bank originated mortgage loan on the market today.

Do you think my reader paid too much for her mortgage refinancing with Wachovia? Absolutely…she never signed up for the free mortgage videos I offer and will pay thousands of dollars too much. It always amazes me why people don’t take advantage of a free product that will not only save them thousands of dollars in unnecessary finance charges but show them how to avoid garbage fees as well. Similar products sell for hundreds of dollars and don’t offer half as much insider mortgage scoop that I give away free every day. I guess the old saying is true…you can lead a horse (in some cases a goat) to water, but you can’t make her drink.

If you’d like to learn how to refinance your mortgage with a wholesale rate without paying lender and broker garbage fees, register for my free video tutorial.

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How to Shop for the Best Mortgage Lender

Robert — Mon, 11 Feb 2008 18:19:49 +0000

If you’re in the process of shopping for a lender to refinance an existing mortgage or for a loan to purchase your home, there are several things you need to know about prospective mortgage lenders. Doing a bit of homework before your refinance will not only help you avoid crooked nationwide lending companies but could save you thousands of dollars. Here are several tips to help you find the perfect lender for your next home loan.

There are literally hundreds of mortgage lenders and banks out there offering mortgage loans. How do you choose the best lender for your situation?

Before I can answer this question it is important to understand the difference between retail and wholesale mortgage rates. Nearly all of the quotes you receive from banks and mortgage companies are retail quotes that include commission based markup. How can you get a wholesale mortgage rate? Many people think that if they contact a wholesale lender directly they can cut out the middleman and the retail quote. This simply isn’t the case…even if you contact a wholesale lender yourself you’ll be dealing with the retail division of that lender and will not get a wholesale rate. The only way to get a wholesale rate is by finding the right mortgage broker to originate your home loan.

How to Shop for a Mortgage Loan

Mortgage shopping means collecting quotes from dozens of lenders and comparing rates, points, and closing costs right? If the quotes you collected on the Internet and from local mortgage companies and brokers were correct this would be the right way to shop for a home loan. The problem is the quotes you receive are not accurate. Most mortgage companies will tell you exactly what you want to hear to get your business…and then switch you to a loan that charges what they want you to pay. How do mortgage lenders do this and get away with it?

Good Faith Estimates Are Not Your Friends

The Good Faith Estimate your banker or broker gives you is just that…it’s an estimate. Given in “good faith”…but what does that really mean? Absolutely nothing…shopping for a mortgage is a lot like dating. Mortgage companies always put their best foot forward to make a good impression and get you to go on that second date. Once they’ve got you that’s when you find out about all the excess baggage in fees and interest rate markup…often too late. What is this hidden interest rate markup? If you spent any amount of time reading the mortgage articles posted on this website you’ll have heard of Yield Spread Premium.

Hidden Commission Fees

Yield Spread Premium creates a hidden commission for your broker. Don’t think you can avoid this hidden commission going with a bank or credit union. While you won’t be paying for Yield Spread Premium with a bank mortgage loan you still have the same markup…only with a different name. When your mortgage rate is inflated by a bank or credit union the hidden commission is called Service Release Premium. Only in this case there’s nothing you can do about it due to a loophole in the Real Estate Settlement Procedures Act. The only way to get a wholesale mortgage rate is with an honest mortgage broker.

You Can Take Out a Mortgage and Pay Only 1%

Paying one percent of your loan amount is a perfectly reasonable fee for the work your mortgage broker does on your loan. There is no reason whatsoever to tolerate any markup of your mortgage rate for Yield Spread Premium to go in your mortgage broker’s pocket. So what is Yield Spread Premium? Simply put, it is a percentage of your loan amount created when the mortgage broker locks and closes your home loan with an above market interest rate. Here’s an example to illustrate the concept.

Suppose your existing home loan is for $300,000. Your mortgage broker closes your new loan at 6.25%. What you don’t know is the lender behind your loan approved you for 5.5%. The spread between what you got and what you could have had creates a hidden bonus for your broker of 3% of your loan amount. This means your broker pockets $9,000 in addition to any of the fees they charge you for loan origination, processing, or other garbage fees found on your Good Faith Estimate. Where does this $9,000 come from? The broker receives a kickback of 1% for every .25% you agree to overpay. In the previous example you overpaid .75% (6.25%-5.5%=.75%) which created 3% of Yield Spread Premium.

What does this mean for you? On a 30 year mortgage at 6.25% your payment will be $1,850 when it could have been $1700. You’re throwing away $150 per month which is $1800 a year just because your mortgage broker lied to you for a commission. I don’t know how you feel about it but $1800 is a lot of money. The good news today is that you can avoid this unnecessary markup of your mortgage rate if you find the right broker to build a relationship with. Do this and you’ll have a win-win relationship for both of you…you get someone to originate your loans without ripping you off and your broker gets a loyal customer for life…clearly a win-win situation for both of you.

How to Find an Honest Mortgage Broker

There are hard-working mortgage professionals out there that don’t abuse Yield Spread Premium…you just need to know how to find them. By finding the right self-employed mortgage broker to originate your loan you’ll avoid garbage fees and commission based markup of your interest rate. You can learn more about finding the right mortgage broker for the job and avoiding all of the unnecessary crap thrown at you by dishonest mortgage companies by registering for my free mortgage video tutorial.

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Reasons to Refinance

Robert — Tue, 05 Feb 2008 22:06:04 +0000

If you are considering refinancing your mortgage you might wonder what valid reasons are for taking out a new home loan. There are a number of different reasons people choose to refinance their mortgage loans; with mortgage rates at the lowest levels since 2004, now is the perfect time for you to get a new home loan. Here are several tips to help you decide if mortgage refinancing is right for you and to show you how to avoid paying too much for the new loan.

Why Refinance Your Mortgage?

The most common reason for refinancing is to secure a lower monthly payment. In order to lower your payment you first have to qualify for a lower mortgage rate…how much lower depends on your situation.

You may have heard of the so called “two percent rule” of mortgage refinancing; this rule says you should not refinance unless the new mortgage rate is two percent lower than your current rate.

This “two percent rule” is complete rubbish…you can save yourself a lot of money refinancing with a rate less than two percent…it just depends on how long it takes to recoup your expenses form refinancing. You can easily determine how long it will take to recoup your expenses if you know the new payment amount. Simply divide your total closing costs including any penalty you have to pay for early repayment by the difference between the new payment and the old payment amounts. This will tell you the number of months it will take you to recoup your expenses from refinancing your home loan and realize a savings.

Lower Payments Are Not The Only Reason

There are cases where it makes sense to refinance with a higher monthly payment. If your goal is to build equity in your home at a faster rate you could refinance with a shorter term length in addition to qualifying for a lower mortgage rate. While this would get you a higher payment you would be paying less to the lender in finance charges and would build equity in your home at a much faster rate.

Other reasons for refinancing to a higher monthly payment include borrowing against your home equity. Refinancing your home loan and taking cash back is generally cheaper than taking out a home equity loan or line of credit. Since you’re borrowing against the equity in your home you can use the cash for any reason and have the advantage of making one monthly payment instead of two with a home equity loan.

Watch Out For Garbage Fees

Once you’ve decided that mortgage refinancing makes sense you’ll need to be careful to avoid garbage fees and commission based markup of your mortgage rate. Taking out a mortgage is a lot like buying a used car…if you’re not careful it’s easy to overpay thousands of dollars for your new mortgage loan. You can learn more about your mortgage refinancing options including costly pitfalls to avoid by registering for our free mortgage video tutorial.

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California Wholesale Lender

Robert — Fri, 18 Jan 2008 22:02:00 +0000

If you’re refinancing your home loan in the State of California and are looking for a wholesale mortgage lender, there are several things you need to know about wholesale interest rates. Most homeowners do not understand how mortgage rates are quoted and overpay thousands of dollars every time they take out a home loan. Here are several tips to help you find a California wholesale lender without paying markup and unnecessary junk fees.

How Are Mortgage Rates Quoted?

In order to accurately quote a mortgage rate the lender needs to have sixteen factors of financial information from you. If you receive rate quotes without providing detailed financial information I can tell you whoever gave you the quote has no intention of honoring it. This is a common tactic of shady mortgage brokers practicing bait-and-switch scams. They’ll promise you the moon and when the deal falls through they switch you to a more expensive mortgage loan that brings them the largest commission.

Once you provide your financial details and get a quote you should know that you have a “retail” mortgage rate quote. Mortgage companies and brokers that deal with the public quote rates that include commission based markup. You might think that going directly to a wholesale lender will cut out the middleman and get you wholesale interest rates; however, these wholesale lenders all have retail divisions that deal with the public and only offer their best rates to mortgage companies and brokers.

What is Commission Based Markup?

When you take out a home loan from a mortgage broker you will pay an origination fee for the broker’s services. This fee ranges from less than one percent to as much as three or four percent. (One percent is a reasonable amount to pay the broker…any more and you’re being taken advantage of) The problem with commission based markup is that you’re already paying for the broker’s work. What your mortgage broker isn’t going to tell you (and frequently becomes angry or defensive if you question him or her about it) is that they are marking up your interest rate to get a kickback from the lender.

See wholesale lenders know that mortgages that have above market interest rates bring them huge profits when they sell your home loan to investors, so they reward mortgage companies and brokers for closing loans with above market rates. The higher your mortgage rate the higher the reward for the person closing your home loan. What does this mean for you? A higher mortgage rate means higher monthly payments and money that you’re throwing away on unnecessary finance charges. You’re already paying the broker for their services; on top of your fee they’re helping themselves to your money in the form of a higher mortgage rate.

This commission based markup of your mortgage rate is called Yield Spread Premium and will easily double, often triple the compensation your mortgage broker receives for your loan. Sounds sleazy right? Here’s an example to show you just how sleazy Yield Spread Premium is. Suppose you are refinancing a $300,000 home loan at 6.5% and the mortgage broker charges you 1.5% for loan origination. That means you have to come up with $4,500 at closing to pay the mortgage broker. What you’re broker isn’t telling you is that you actually qualified for 6.0% from the lender and that they’ve marked it up because the lender pays them 1% of your loan amount for every .25% you overpay.

In this example the broker receives an additional 2% or $6,000 on top of the $4,500 you’re already paying for their services. That’s $10,500 for a few hours work and you get stuck paying an above market interest rate.

Finding California Wholesale Lenders

The good news for you today if you’re refinancing in California or any other State for that matter, is that there are ways to refinance your home without paying Yield Spread Premium. (Or lender junk fees) You can find honest mortgage brokers willing to work for reasonable origination fees if you know how to shop for a mortgage loan.

You can learn more about comparison shopping for California Wholesale Lenders when refinancing and avoiding unnecessary garbage fees by registering for a free mortgage video tutorial. Register today; the videos are free and can save you thousands of dollars on your next mortgage loan.

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Wells Fargo Mortgage

Robert — Sat, 12 Jan 2008 21:46:15 +0000

If you’re considering taking out a mortgage to purchase your home or refinance your existing mortgage with a bank like Wells Fargo, here are several things to consider first. Refinancing with the wrong lender could not only cost you thousands of dollars but could lead to the loss of your home. Here are several tips to help you decide what kind of mortgage lender is right for you.

Wells Fargo mortgage is a fully owned subsidiary of Wells Fargo Bank. Today Wells Fargo is the second largest mortgage company in the United States just behind Countrywide. Wells Fargo bank and its mortgage subsidiary is a darling on Wall Street and a favorite pick of mutual fund managers and investors because of their incredible profit margins. I’ve never been a customer of Wells Fargo Mortgage; however, I had a checking account with Wells Fargo Bank and I can tell you I’ve never felt more nickeled and dimed since staying at the Luxor hotel in Las Vegas.

Wells Fargo’s profit margins are so high not only because of all the fees they charge with their so called free checking accounts, but from their overpriced mortgage loans and expensive investment accounts. Because of their consumer gouging business model Wells Fargo has received negative press from several consumer watch groups, including ACORN, charging the bank with predatory lending practices. If you’re considering taking out a mortgage from Wells Fargo, Bank of America or any other bank or Credit Union, here are several compelling reasons not to.

Banks and the Real Estate Settlement Procedures Act (RESPA)

RESPA is legislation in the United States that protects homeowners from predatory lending practices by requiring mortgage lenders to disclose their profit margins and markup. The Banking Lobby spent millions of dollars in the early 90s lobbying Congress to have the law changed, and they succeeded. Banks are now exempt from the Real Estate Settlement Procedures Act.

What does this mean for you? Your bank is not required to tell you anything more about their mortgage products than the Annual Percentage Rate (APR). While separate truth in lending legislation requires banks to disclose some form of APR for their mortgage products, there is no standard method for calculating the APR or requirements for what fees must be used in the calculations. This means your bank is free to calculate the APR however they like; this limitation in the law has turned the Annual Percentage Rate into more of a marketing tool for lenders than the consumer protection legislation it was intended to be.

Let’s get back to RESPA shall we? Because your bank is exempt from this legislation you’ll never know what the bank’s profit margin is on our loan. And just where does this profit come from? Many people think that once they close on a mortgage the bank kicks back and cashes their payment checks each month to make a profit from the interest paid on the loan. This simply isn’t true. Banks make the majority of their profits by selling mortgages to investors on the secondary market. Furthermore, the bank maximizes this profit by selling loans with above market mortgage rates.

Above Market Mortgage Rates and Service Release Premium

Your bank isn’t stupid…they know exactly what’s going on in the mortgage industry and what the wholesale mortgage rate is every day. Furthermore, the bank knows exactly what mortgage rate you qualify for based on a thorough examination of your financial details. (sixteen factors to be complete) The bank determines your mortgage rate and then marks up that rate to boost profits when the loan is sold. This markup of your mortgage rate is called Service Release Premium and is the reason you should never take out a mortgage from any bank. Period.

Not convinced? Don’t ask your banker. Most bank employees have never heard of Service Release Premium and couldn’t quote you a wholesale mortgage rate if their very lives depended on it. Bank employees will show you their daily rate sheets and swear on a stack of bibles that their rates are not marked up. The problem is that bank mortgage rate sheets have Service Release Premium built into them. The only way to recognize this is to compare your bank’s mortgage rates to those offered by wholesale mortgage lenders and you can easily spot their markup.

Can You Get Wholesale Mortgage Rates?

Do you simply call up a wholesale lender and ask for a wholesale mortgage rate? Unfortunately, no. Every wholesale lender out there has a retail division that deals with the public. If you contact one of these lenders you’ll be getting the same markup of your mortgage rate that the bank adds. Does this mean wholesale mortgage rates are out of reach of the average homeowner? Of course not!

How to get Wholesale Mortgage Rates

You can take out a mortgage with a wholesale rate and avoid lender garbage fees. In order to do this you need to find a mortgage broker willing to give you access to wholesale rates without overcharging you. These brokers do exist; however, you’ll need to learn how to negotiate with them to get the deal you want.

You can learn more about negotiating with a mortgage broker for wholesale rates while avoiding junk fees by registering for my free mortgage refinancing video tutorial.

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Why You Should Never Refinance Your Mortgage With a Bank

Robert — Wed, 26 Dec 2007 23:14:19 +0000

If you’re considering refinancing your mortgage for any reason and are thinking of taking out the new loan from your bank, there are several very good reasons why you should not do this. While it’s true that mortgage brokers have a reputation for overcharging their customers, banks are actually worse due to loopholes the laws requiring lenders to disclose their profit margins. Here are several tips to help you avoid paying too much when refinancing your home mortgage loan.

Real Estate Settlement Procedures Act (RESPA)

You might have heard of the Real Estate Settlement Procedures Act which requires mortgage lenders to disclose their fees and markup. What you might not know is that thanks to the Banking Lobby your bank is exempt from this legislation and not required to disclose any this information to you. Banks take full advantage of this loophole in the law by charging their customers the interest rate markup known as Service Release Premium. Fortunately, once you understand how wholesale mortgage rates work this markup is easy to recognize.

What is Service Release Premium (SRP)?

Banks are in the mortgage business to make money. Banks know the rates that other lenders offer and they know the rate you could get from a wholesale lender. The mortgage rate your bank offers is marked up to include Service Release Premium.

This is a “premium” mortgage rate and is designed to boost the banks profits when your mortgage loan is sold to investors. Once you close on your mortgage the bank immediately turns around and sells your loan on the secondary market.

Banks know that loans with above market mortgage rates bring them higher profits and this is why Bank mortgage rates will never be competitive. Banks rely on the fact that the majority of homeowners do not understand mortgage rates and that they are exempt from the Real Estate Settlement Procedures act to fleece their customers out of thousands of dollars.

Don’t Trust Your Banker’s Rate Sheets

Most bank employees have never heard of Service Release Premium and will swear to you that their rates have not been marked up. They will even show you the Bank’s rate sheets for that day claiming that their rates are competitive. The problem with the Bank’s rate sheets is that they already have Service Release Premium built into them. Only by comparing the banks rates to the wholesale mortgage rates offered by a broker can you spot the bank’s markup. Because the bank is not required to disclose their markup of profit margin for your loan you will never know exactly what your bank is charging.

Upfront Mortgage Brokers Can Save You Thousands

Most mortgage brokers do not offer their customers wholesale rates. Just like banks these mortgage brokers mark up the interest rate to earn a commission from the lender. When this markup is made by a mortgage broker it is called Yield Spread Premium. Because you are already paying this person an origination fee for arranging your loan, the markup is not only unnecessary, but is dishonest.

There are honest mortgage brokers willing to work for a one percent origination fee. These brokers are frequently called “Upfront Mortgage Brokers” because they disclose a flat fee upfront and do not charge Yield Spread Premium with their loans.

You can learn more about refinancing your mortgage without paying Service Release Premium or Yield Spread Premium by registering for my free mortgage refinancing videos.

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How to Negotiate for the Best Mortgage Rate When Refinancing

Robert — Fri, 14 Dec 2007 22:10:23 +0000

If you are in the process of refinancing your mortgage, negotiating for mortgage rates can be very intimidating. You can greatly improve the odds of negotiating successfully by understanding how your mortgage rate is quoted. Here are the basics you need to know about mortgage rates to help you negotiate for a wholesale mortgage rate and save thousands of dollars when refinancing your mortgage.

What Are Wholesale Mortgage Rates?

Wholesale rates come directly from mortgage lenders and are generally not offered to the public. These loans are sold by third parties and include commission based retail markup. Loan originators are the mortgage companies, brokers, and websites you visit when shopping for a loan. These businesses make money by charging origination fees for their service and by markup up the wholesale rate your lender approved you. The good news is that commission based markup can be avoided if you know how to negotiate when refinancing your mortgage.

Commission Based Markup and Yield Spread Premium

Yield Spread Premium is the technical term for commission based markup of your mortgage interest rate. Your mortgage broker knows the interest rate that you were approved; however, they mark this rate up because the lender pays them a bonus of one percent of your mortgage amount for every .25% they get you to overpay. Most mortgage brokers will never admit that they are marking up your mortgage rate and many become angry and defensive when questioned about their markup.

How Do You Negotiate With Mortgage Brokers?

Negotiation can be intimidating for many homeowners. Fortunately, negotiating for wholesale mortgage rates is more like comparison shopping. If you get a mortgage broker that refuses to answer your question or agree to your terms you’ll simply move on to the next broker. Mortgage brokers are licensed by your State and are a dime a dozen. Spend a little time with your phone book and you should have no problem finding a broker willing to refinance your mortgage with a wholesale rate.

How to Get a Wholesale Mortgage Rate

You can avoid Yield Spread Premium when refinancing your mortgage by finding a mortgage broker willing to work for an origination fee alone without Yield Spread Premium. Start by telling potential mortgage brokers that you understand how Yield Spread Premium works and will not accept a mortgage that includes commission based markup. Tell your mortgage broker that you will pay a reasonable origination fee for their services. A reasonable fee for a mortgage broker’s work is one percent of the mortgage amount.

Once you’ve found a mortgage broker willing to work for an origination fee without charging you Yield Spread Premium you’ll need to pay close attention to your loan documents to ensure this person is being honest with you. Yield Spread Premium will appear on the lender’s rate lock confirmation, your HUD-1 statement, and possibly on the Good Faith Estimate (GFE). Yield Spread Premium should be disclosed on the Good Faith Estimate; however, many brokers omit this markup to make their loan offers more attractive. You’ll notice that the GFE and HUD-1 statement look very similar. If Yield Spread Premium is present with your loan you will find it around lines 810-812 of these documents.

Beware Mortgage Junk Fees

There are a number of garbage fees mortgage brokers try and slip past you when refinancing. If you find anything on your Good Faith Estimate or HUD-1 statement that resembles a rate lock fee, mortgage broker courier fee, processing fee, or application fees, these are garbage fees that you do not have to pay. Take the “rate lock fee” for example. Mortgage lenders never charge your broker a fee for locking in your interest rate. If you find this fee listed on any of your loan documents you can be sure it’s headed for your mortgage broker’s pocket.

You can learn more about refinancing with a wholesale mortgage rate with a free mortgage DVD.

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Wholesale Mortgage Lenders

Robert — Thu, 20 Sep 2007 19:20:33 +0000

If you are in the market for a new mortgage either to purchase your home or refinance an existing loan, you might wonder if a wholesale lender could save you money. Most homeowners in the United States do not understand how the mortgage markets work and are unable to take advantage of wholesale rates even if they contact a wholesale lender directly. Homeowners who learn how the system works are able to take advantage of the wholesale nature of the market and save thousands of dollars. Here are the basics you need to know in order to take advantage of wholesale mortgage rates with your home loan.

Mortgage Market Basics

There are two markets in the United States for mortgage loans. The primary mortgage market is where consumers like you and I take out loans to purchase homes. The secondary market is where institutions and other investors buy and sell mortgage debt for a profit. The primary market is made up of several types of mortgage lenders, most of which make the majority of their profits by selling mortgage debt on the secondary market.

Types of Mortgage Lenders

The basic types of mortgage lenders you will encounter in the primary market include wholesale lenders, banks and credit unions and ”broker-banks” known as correspondent lenders. I don’t recommend taking out a mortgage from your bank, credit union, or a broker-bank such as E-Loan because these lenders are exempt from the Real Estate Settlement Procedures Act thanks to a loophole courtesy of the Banking Lobby. Because these lenders are not legally required to play by the same rules as other mortgage lenders you’ll never know how much they’ve marked up your mortgage interest rate. Besides, why would you want to do business with a lender that isn’t required to play by the rules?

This article is about wholesale mortgage lenders, which now that we’ve eliminated banks and broker-banks are all we’re left with. What are wholesale lenders? Wholesale lenders are institutions that sell loans on the secondary market for a profit. As members of the public, you and I cannot deal with a wholesale lender directly. Even if you were to contact one of these lenders you’ll be dealing with a retail division of that lender and you will not get a wholesale rate. How can you get a wholesale mortgage rate? Glad you asked…

Mortgage Brokers Have Access to Wholesale Rates

If you want to take advantage of wholesale mortgage rates you’ll need to enlist the help of a mortgage broker…and not just any broker, you need to find one willing to work for an origination fee without charging you Yield Spread Premium. Finding a mortgage broker like this is not an easy task. Yield Spread Premium frequently doubles often triples the compensation mortgage brokers receive on your loan.

What is Yield Spread Premium?

Yield Spread Premium is simply the difference between the wholesale rate the lender approves you and the rate your mortgage broker “sells” you. This markup of your mortgage rate is what makes your loan “retail.” Mortgage brokers do this because the wholesale lender pays them a bonus for closing mortgage loans with above market interest rates. In fact your mortgage broker receives a commission of one percent of your mortgage amount for every .25% they con you into overpaying. I use the word “con” because most brokers conveniently omit this markup from your Good Faith Estimate and have ways of cleverly disguising it on the HUD-1 statement.

Many mortgage brokers get defensive, even angry when questioned about Yield Spread Premium. They’ll tell you that because this fee isn’t coming out of your pocket that you shouldn’t worry about it. What you should be concerned about is the reason that this fee is being paid…your broker gets this commission because you’re agreeing to pay an above market mortgage rate.

This is why finding the right mortgage broker is critical for getting a wholesale mortgage rate. You’ll need to negotiate with potential brokers to pay a reasonable origination fee (not more than one percent) without paying Yield Spread Premium. Start by telling your mortgage broker that you understand how Yield Spread Premium works and will not accept this markup on your loan.

If you’d like to receive more advice about wholesale mortgage lenders and taking out a mortgage without paying too much check out my free Underground Mortgage Videos.

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