Want the lowest mortgage refinance rates for your next home loan? Did you know that your neighbors are literally throwing away thousands of dollars every year because of hidden markup of their so-called lowest mortgage refinance rates? Here are several of my best tips for saving money and getting the lowest mortgage refinance rates that don’t include hidden markup or junk fees.
Hidden Markup for an Unnecessary Commission
Did you know that the person arranging your home loan collects a second commission known as Yield Spread Premium for overcharging you? In fact, according to the HUD Secretary your neighbors in the United States are overpaying sixteen billion dollars this year because of this hidden markup. I call it an unnecessary commission because most brokers do their best to hide and explain away the fee known as Yield Spread Premium. After all, if the lender’s paying a fee that isn’t coming out of your pocket why should you care, right? It’s not the fact that lender paid fees aren’t coming out of your pocket that should concern you, what should bother you is why your lender is paying this fee in the first place.
All You Need to Know About Yield Spread Premium
Mortgage fat cats refer to the fee they collect for marking up your mortgage interest rate as Yield Spread Premium or YSP. Simply put, this fee is paid by your lender for locking and closing your home loan with higher than necessary interest rates. You’re not really getting the lowest mortgage refinance rates if their being marked up by a middleman are you? The problem with this type of commission is that you’re already paying the broker a perfectly reasonable origination fee for the work they do and their markup drives up your payment by thousands of dollars unnecessarily.
Here’s an example to illustrate my point. Suppose you are refinancing your home for $250,000. Your broker charges you an origination fee of 1.5 percent and brags about having the lowest mortgage refinance rates around at 6.25 percent. The first thing you should know is that this broker is overcharging you for the origination fee at 1.5 percent. One percent of your loan amount is a perfectly reasonable fee to pay for loan origination without any markup for Yield Spread Premium. The second thing you should know about this home loan is that the lender actually approved you for their lowest mortgage refinance rates at 5.75 percent; however, the broker marked it up to collect two percent of your loan amount in Yield Spread Premium.
In this example, the commission pocketed by your broker is the 1.5 percent loan origination fee you’re paying at $3,750, plus the lender paid compensation (Yield Spread Premium) for overcharging you, 2 percent or $5,000 for a total of $8,750. (Just for a few hours’ work) As you can see, the broker has more than doubled their commission (at your expense) and here’s why. Your payment on a thirty year, fixed-rate home loan at 6.25 percent will be $1,539 per month. If you had the lowest mortgage refinance rates you deserve at 5.75 percent your payment would only be $1,458. That’s a difference of $972 per year that you could be using for other things…all because your broker overcharged you.
How to Get the Lowest Mortgage Refinance Rates
You don’t have to pay for this unnecessary markup of your lowest mortgage refinance rates. It is possible to pay a flat one percent for the mortgage origination fee and walk away with wholesale mortgage rates without paying points or accepting markup for Yield Spread Premium, you just have to find the right person to arrange your home loan.
You can learn more about getting the lowest mortgage refinance rates without paying hidden markup or junk fees by checking out my free Underground Mortgage Videos.
Here’s a quick sample to get you started on the road to a wholesale mortgage rate for your next home loan.