Mortgage refinancing in today’s economy isn’t rocket science; however, it helps to have the right people in your corner to arrange your next home loan. Should you choose a big-named company like Amerisave when mortgage refinancing or is that small-time broker your safe bet for getting the best deal? Did you know that the according to the Secretary of Housing and Urban Development homeowners in the United States will overpay nearly sixteen billion dollars this year along because of hidden markup and junk fees? Here are several of my best tips for choosing the best refinance companies for your home loan while avoiding hidden markup and junk fees.
Mortgages for Dummies
You don’t have to be a personal finance guru to get the best deal when mortgage refinancing, you just have to find the right person to arrange your next home loan. How do you find the right person? Let me start by fist describing who the wrong person is for your next home loan.
Mortgage brokers get paid several different ways for arranging mortgage refinancing. Your broker can charge you a loan origination fee for arranging your new home loan or accept lender paid compensation. (Sometimes even both)
Wait a minute! Why would the lender pay for your mortgage broker’s work when arranging your mortgage refinancing? After all, if the broker’s fee isn’t coming out of your pocket isn’t that a win? Consider why the lender would pay this fee and you’ll quickly discover this lender paid mortgage refinancing compensation needs to be avoided at all costs…
Yield Spread Premium
Lenders reward brokers for locking and closing mortgage refinancing home loans with higher than necessary mortgage rates with a fee known as Yield Spread Premium. Simply put, for every .25% that your mortgage broker gets you to unknowingly agree to overpay the lenders pay them a kickback of 1.0% of your home loan amount. Lenders do this because home loans with higher than market interest rates bring them boocoo profits when the loans are sold to investors on the secondary market.
Do you think the broker is going to tell you that they’re marking up your mortgage rate? While it’s true that recent changes to the Real Estate Settlement Procedures Act require brokers to disclose Yield Spread Premium along with their origination fee; however, they all have clever ways of explaining it away for the uninitiated homeowner. I mean really, why should you worry about a fee that’s coming out of some else’s pocket?
Hidden Markup & Junk Fees, Oh My!
It’s true with anything that trusting the wrong person can lead to disaster. When it comes to your home loan how do you find someone or the best refinance companies that you can trust? Not all mortgage brokers are used car salesmen looking to make a buck at your expense; there are plenty of honest, hardworking brokers out there. In fact, one of them left me a comment today that I should be “expelled” from the country for publishing what I write here. (Everyone’s entitled to his or her own opinion…it is after all a free country…)
You Can Get Wholesale Mortgage Rates
I said earlier that you don’t have to be a financial guru to walk away with a home loan that’ll make your neighbors green with envy; you just have to find the right person to arrange your mortgage refinancing. How do you find the right person when mortgage refinancing? Many large companies like Amerisave Mortgage have high overhead and may not be able to negotiate the kind of deal that gets you wholesale mortgage rates. Look for local, self-employed brokers in your area (working from home is ideal) and tell this person that you understand how Yield Spread Premium works and will not accept mortgage refinancing that includes hidden markup or junk fees.
You can learn more about mortgage refinancing with wholesale interest rates without junk fees by checking out my Underground Mortgage Refinancing Videos.
Here’s a sample to get you started on the path to a wholesale interest rate for your next home loan.