If you’re in the market for a new home loan and want the best refi rates available there are several things you need to know about mortgage rate quotes. Did you know that nearly all of the quotes you get online and from other mortgage companies have been marked up to create a hidden commission for the person arranging the mortgage? If you want the best refi rates, you have to avoid hidden markup that can add hundreds of dollars to your monthly payment. Here’s how to get the best refi rates for your next home loan without falling for the same lender tricks that your neighbors did.
How to Get the Best Refi Rates Available
What are the best refi rates around? Would you recognize the one if you found it? One of the problems you’ll encounter is that most homeowners don’t understand the retail nature of mortgage rates or know how to recognize the hidden markup that makes their best refi rates “retail.” Simply put, the best refi rates you can get are called par mortgage rates. Par means that the mortgage rates have not been marked up to create a commission for the person arranging your home loan and that you’re not required to pay discount points to qualify.
Discount points are a fee lenders charge to buy down your mortgage rate. One discount point is equal to one percent of your mortgage rate paid at closing and usually lowers your best refi rates by .25%. The problem with discount points is that in today’s market they are unnecessary and are a waste of money. Most homeowners are already familiar with discount points when it comes to getting the best refi rates; however, not very many homeowners today understand how the hidden markup raises their payments unnecessarily.
Yield Spread Premium Definition
The hidden markup of your quote intended to generate a fee from the lender is called Yield Spread Premium. This Yield Spread Premium is paid by mortgage lenders for locking and closing your home loan with a higher than necessary interest rate. Think of Yield Spread Premium as a kickback from the lender to the person arranging your mortgage for overcharging you. How can you tell if Yield Spread Premium is included when refinancing your home? If you’re refinancing with a mortgage broker you’ll find the kickback on your HUD-1 statement along with the mortgage origination fee. If you refinance with your bank you won’t find this fee anywhere on your loan documents because banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margin on your mortgage.
The fact that your bank doesn’t have to play by the same rules as other mortgage lenders should be reason enough for avoiding this type of lender when refinancing; however, many of your neighbors are still throwing thousands of dollars away every year because they simply don’t know any better. Truth be told, you can get wholesale, or Par mortgage rates simply by finding the right person to arrange your next home loan and cut hundreds of dollars from your payments.
You can learn more about getting the best refi rates available with a wholesale mortgage by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample to get you started filled with tips your neighbors wish they had when shopping for the best refi rates.