If you want the lowest refinance rates and mortgage broker fee for your next home loan there are several things you need to know to avoid overpaying. Did you know most of your neighbors overpaid their mortgage broker fee and didn’t get the lowest refinance rates because the broker marked up their interest rate? The good news is that you can get the lowest refinance rates without overpaying your mortgage broker fee. Here are several of my best tips for getting the lowest refinance rates without overpaying the mortgage broker fee for your next home loan.
Your Mortgage Broker Fee
The broker fee you pay when refinancing your home loan is for loan origination, meaning compensation for the broker’s work arranging your home loan. What is a reasonable fee to pay for loan origination? Many brokers charge two percent or higher; however, a reasonable mortgage broker fee is one percent of your loan amount assuming the broker has not marked up your lowest refinance rates.
The origination fee is easy to find and understand in your loan documents, but what about the hidden markup of the lowest refinance rates? The reason nearly all of your neighbors overpay when refinancing is because of a little known fee called Yield Spread Premium. What’s confusing about Yield Spread Premium is that the fee doesn’t come out of your pocket, it’s paid by your lender.
Getting The Lowest Refinance Rates
Why should you care about a fee paid by your mortgage lender? What should concern you is not the fact that your lender is paying Yield Spread Premium but why this fee is being paid. Mortgage lenders reward brokers that lock and close home loans with higher than necessary mortgage rates with the fee known as Yield Spread Premium. Did you know that the person arranging your home loan receives one percent of your home loan amount for every .25 percent they jack up your interest rate?
This unwanted junk fee is paid by the lender in addition to the origination fee coming out of your pocket. What does this unnecessary markup of your mortgage rate do to your monthly payment? Suppose your refinancing your home for $250,000 at 6.5% paying a mortgage broker fee of 1.5 percent. This origination fee amounts to $3750 that you’ll be required to pay at closing. Your payment on a thirty year fixed rate mortgage will be $1,600 per month. What the person arranging your home loan didn’t tell you is that you actually qualified for a 6.0 percent rate and they marked up your interest rate to 6.5 percent and over charged your mortgage broker fee.
If you had the mortgage rate you deserve at six percent your payment would only be $1498 per month. That’s $1,224 a year you’re throwing away because your broker took advantage of you… The good news is that you can get a new home loan paying a flat loan origination fee of one percent without this unnecessary markup of your mortgage rates.
You can learn more about getting the lowest refinance rates without overpaying the mortgage broker fee by checking out my free Underground Mortgage Videos.
Here’s a sample to get you started with a dirty secret your mortgage lender hopes you won’t find out about.