If you’re shopping for the Best Fixed Rate Mortgage and want to avoid paying unnecessary fees there are several things you’ll want to know about the way mortgage rates are quoted. Shopping for a home loan is not unlike shopping for a new kitchen appliance; everyone’s trying their best to make a buck at your expense. Here’s how to cut through the junk fees and unnecessary markup to get the Best Fixed Rate Mortgage for your next home loan.
Unnecessary Mortgage Rate Markup
Like that kitchen appliance you may have been shopping for the so called best fixed rate mortgage rates you find online and get from your local mortgage companies have been marked up to create a commission for the person behind the loan. Ordinarily this wouldn’t be a bad thing; however, since you’re already paying a perfectly good origination fee for this reason, any markup of your mortgage rate for a commission is just double-dipping at your expense.
When mortgage lenders pay a fee to the person arranging you’re home loan they’re not doing it to be charitable, they’re doing it as an incentive for overcharging you. That’s right, mortgage lenders reward mortgage companies and brokers for locking and closing home loans with higher than necessary interest rates with a fee known as Yield Spread Premium. The way it works is that for every .25% you unknowingly agree to overpay the person arranging your loan receives 1% of your loan amount. Not exactly encouraging mortgage brokers to run an honest business is it?
New changes in RESPA legislation for 2010 require mortgage brokers (banks are still exempt) to disclose Yield Spread Premium along with their origination fee. The problem is many mortgage brokers tell people because this part of the origination fee isn’t coming out of their pockets they shouldn’t worry about it. These same brokers also fail to mention what the fee is doing to their mortgage rate and monthly payment. Yield Spread Premium is the reason 98% of your neighbors are paying too much for their home loans.
Finding Best Fixed Rate Mortgage Loans
You don’t have to be a financial genius to find the best fixed rate mortgage that doesn’t include this unnecessary markup or junk fees. In fact, all you need to do is find the right person to arrange your next home loan. It’s very easy to get the best fixed rate mortgage paying a flat one percent origination fee without inflated closing costs. Who is the right person to get you this deal? First of all, I can tell you it’s not your bank. Because your bank is exempt from the Real Estate Settlement Procedures Act they’re not required to disclose much more than the Annual Percentage Rate (APR) that comes along with the Good Faith Estimate. Because this APR is based on “estimated fees” it’s basically worthless when it comes to comparing mortgage loans. While it is true banks don’t take Yield Spread Premium on their mortgage loans the bank’s mortgage rates have the same kind of markup built into them to generate a fee for the bank known as Service Release Premium. At the end of the day banks simply do not offer wholesale mortgage rates to their customers.
If you want a wholesale mortgage rate for your next home loan you’ll need to enlist the help of the right mortgage broker for the job. There are honest, hardworking professionals out there in the home loan business; the problem is that many of them work for bloated, pricey nationwide mortgage companies that simply cannot afford to negotiate Yield Spread Premium. Your best bet for getting a wholesale mortgage rate is to find a small time, self-employed mortgage broker licensed in your State. Small town, self-employed mortgage brokers don’t have the overhead and operating expenses of giants like Lending Tree and will be much more willing to negotiate a wholesale mortgage rate when arranging your home loan.
You can learn more about getting the Best Fixed Rate Mortgage with a wholesale interest rate by checking out my free Underground Mortgage Videos.
This sample video shows why nearly all of your neighbors are paying too much for their home loans and how you can avoid unnecessary markup and fees.