Loans Don’t Need Markups and Brokers Don’t Need Kickbacks
While lenders and brokers should be paid for their services, some expect too much in the way of payment. During your home mortgage refinance negotiation, brokers will add unnecessary junk fees and markups that are said to be paid by the wholesale lender when in actuality; you are the one who ends up paying.
Although adding junk fees and markups while refinancing mortgage loans is a common occurrence, it should not deter you from pursuing the best refinance home mortgage rate available. While upfront costs are unavoidable, you shouldn’t have to pay more than the broker deserves for his or her services.
Junk Fees and Markups
A junk fee is an unnecessary fee charged by your lender or broker that only serves to line their pockets with your money. Even though brokers must disclose their fees by law, brokers and lenders often disguise the names of their fees to trick you into paying. One of the most costly (and unnecessary) fees is called Yield Spread Premium.
Yield Spread Premium
Yield Spread Premium (YSP) is a fee that is paid by the lender when your broker locks in and closes on your home loan refinance with a higher than necessary mortgage rate. For every .25% you unknowingly agree to overpay, your broker is rewarded with a commission that equals 1% of your loan. While your broker will explain to you that this will result in lower upfront costs, it also means that this 1% (or more if your broker offers you a much higher interest rate than one for which you qualify) will result in higher than necessary mortgage payments because you’re paying more than you should for the refinancing. Often, this unethical practice causes you to have to overpay by thousands of dollars when refinancing your mortgage loan.
Third Party Charges
During refinancing, you may also have to pay third party fees including appraisal and credit report fees. While third party fees are fairly standard refinancing costs, be vigilant and make sure your broker isn’t marking them up in order to pocket the difference. Always ask for an invoice of third party charges to keep your broker honest.
Avoid Unnecessary Costs
Don’t fall prey to junk fees and unnecessary markups when closing on your home loan refinance. To get the best home mortgage loan refinance possible, arm yourself with mortgage insider lingo so that you can beat your mortgage broker at his own game. With the help of a mortgage broker with over 27 years of experience in the industry, I have put together a series of 6 videos that provide you with all of the insider information you need to know to obtain the maximum benefit when refinancing your home. These free videos take you step-by-step through the process of refinancing your mortgage and teach you how to get a wholesale rate with no junk fees.
Register today for my free Underground Mortgage videos and learn how to avoid unnecessary markups. I guarantee 100% that you’ll get the best home mortgage loan refinance available.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
