Are you considering a new home loan and are searching online for the best refinance mortgage? Finding the best deal when refinancing your home can be tricky; however, you don’t have to be a financial guru to get a better deal than your neighbors did when refinancing. Here are several tips to help you get the best refinance mortgage for your home without paying unnecessary markup of junk fees.
Best Refinance Mortgage Loan Online
The Internet makes it easy to compare loan offers when shopping for a new home loan; however, it can be very difficult comparing apples to apples when shopping for a mortgage loan. Most people approach mortgage shopping the same way that they shop for a household appliance. Comparing loan offers in this matter can be confusing and doesn’t give you an accurate picture of which loan is better. If you shop for a mortgage loan like you would when purchasing a home appliance you’re going to pay more than you need to just like 99% of your neighbors.
In order to find the best refinance mortgage for your home you need to first understand the basics of how mortgage loans are originated, and by whom. Here’s a quick rundown of the different types of lenders and loan originators to get you started on the right foot.
Mortgage Loan Originators 101
Mortgage originators are simply the people arranging home loans for various lenders. Your mortgage loan originator could be a banker, a mortgage broker, or a mortgage company (on or offline). Most loan originators arrange loans for some other lender. The exception being your bank and other direct lenders that fund loans with their own cash…we’ll get to these lenders in a moment.
The first type of lender I’m going to discuss is your bank or credit union. Banks make it very easy to get mortgage loans…especially if you have wonderful credit. The downside to banks is that they don’t play fair when it comes to home loans and take advantage of their customers more often than not. The Banking Lobby in the United States represents big banking interests and is an extremely effective lobby with deep pockets. Lobbyists throw money at your Congressional Representatives when they want laws changed like the Banking Lobby did in the early 90s to get the Real Estate Settlement Procedures Act changed, excluding banks from this important legislation that is supposed to protect you from predatory lending practices. In a nutshell the Real Estate Settlement Procedures Act or RESPA requires certain loan originators to disclose their markup and profit margin on your home loan.
The Banking Lobby successfully had the law changed to exclude banks. This means your bank is not required to disclose any of their markup of your mortgage rate or profit margin when your home loan is sold to investors. The bank is only required to give you a fictitious Good Faith Estimate and Annual Percentage Rate based on the bank’s estimate fees…given in “good faith” of course. Can you trust the Annual Percentage Rate and Good Faith Estimate? Banks and other mortgage lenders routinely low-ball the fees listed on their Good Faith Estimates. After all, it’s just an “estimate” given in good faith. Because the Annual Percentage Rate is also based on this “estimate” it is completely unreliable for mortgage shopping, and not just because every lender out there calculates APR differently.
Because of the change in the law banks don’t have to play by the same rules as other mortgage originators. Do you really want to refinance your home with a lender that doesn’t have to play by the rules? I can tell you without a doubt that banks do not offer their customers wholesale mortgage rates…the bank always quote higher mortgage rates because closing home loans with higher than market mortgage rates brings them a premium profit known in the industry as Service Release Premium.
What Are Wholesale Mortgage Rates?
Banks and other direct mortgage lenders that fund loans with their own cash will never give you the best refinance mortgage for the simple fact that they make the majority of their profits collecting Service Release Premium when your home loan is sold to investors. So where do wholesale mortgage rates come from? That’s easy…wholesale mortgage rates come from wholesale lenders. The only problem is that wholesale lenders don’t deal with the public…that is after all what makes them wholesale, right?
How can you get a wholesale mortgage rate when refinancing your home loan? Some homeowners think that by contacting a wholesale lender directly they’ll have access to wholesale mortgage rates; however, when you do this you’re actually dealing with a retail division of that wholesale mortgage lender and will find the same marked up mortgage rates you get everywhere else.
The secret to walking away with a wholesale mortgage rate isn’t about comparing mortgage quotes from every mortgage website until you can’t see straight. The trick is to find the right person to arrange your next home loan, giving you access to wholesale mortgage rates without charging you junk fees. This isn’t as tricky as you might think…you don’t have to be a personal finance guru or have connections to do it…you just have to find the right mortgage broker for the job. That’s right, only mortgage brokers have access to wholesale mortgage rates and when they’re not marking them up like banks do for a fee known as Yield Spread Premium you’ll get the best refinance mortgage for your home.
What is Yield Spread Premium?
We’ve already discussed the fee banks collect for overpriced home loans known as Service Release Premium…Yield Spread Premium is very similar. Don’t let the terminology intimidate you…basically Service Release Premium and Yield Spread Premium do the same thing and you want to avoid paying for it. When a mortgage broker locks and closes a home loan with a higher than necessary mortgage rate they receive a commission from the lender known as Yield Spread Premium. Wholesale lenders pay this fee to reward mortgage brokers for overcharging their customers because they make a profit by selling loans to investors on the secondary market just like banks. Home loans with higher than market mortgage rates always bring a premium profit.
How can you avoid this unnecessary markup of your mortgage rate when refinancing your home loan? You’re already paying the mortgage broker a perfectly reasonable origination fee for their part in arranging your home loan…why should they get an “extra” commission at your expense? This brings us back to finding the right mortgage broker willing to work for a flat one percent loan origination fee without taking Yield Spread Premium on your home loan. There are mortgage brokers out there willing to work for the origination fee without charging you junk fees; you just need to know how to find them.
You can learn more about finding the right mortgage broker for the best refinance mortgage without paying unnecessary fees or markup by checking out my free underground mortgage refinancing videos.
Register today while this is still a free offer and you’ll get immediate access to my password protected member area and a list of honest mortgage brokers in your State to get you started on the right foot to your best refinance mortgage loan.