Want a mortgage refinancing tip guaranteed to cut $1200 from your payments every year? This little known refinancing mortgage secret slashes unnecessary markup and junk fees from your next home loan. Best of all, my advice is free and will help you avoid the same mortgage refinancing pitfalls responsible for your neighbors overpaying year in and year out for their home loans. These refinancing mortgage pitfalls I’m talking about include unnecessary markup of your interest rate and junk fees that serve no purpose but to improve someone else’s bottom line. Here’s my best mortgage refinancing advice to save you $1200 annually from the mortgage fat cats.
Refinancing Mortgage Yield Spread Premium
Yield Spread Premium (YSP) is a fee lender pay mortgage refinancing brokers and other loan originators for locking and closing your refinancing mortgage with a higher than necessary interest rate. Lenders publish daily rate sheets that include varying amounts of markup to create YSP for the person arranging your home loan. For every quarter point above the mortgage refinancing interest rate you qualified for that person receives one percent of your loan amount as a kickback. The problem with this kickback known as refinancing mortgage Yield Spread Premium is that you’re already paying the broker a perfectly reasonable loan origination fee for their part in arranging your home loan. Any Yield Spread Premium the broker collects drives your monthly payment up completely unnecessarily.
How to Avoid Mortgage Refinancing Yield Spread Premium
Suppose you find a broker willing to arrange your refinancing mortgage loan for a one percent origination fee without collecting Yield Spread Premium on your new home loan. One percent for broker loan origination is a perfectly reasonable fee without collecting an unnecessary commission from the lender. There are honest brokers out there that are willing to negotiate the kind of refinancing mortgage loan that I’m describing here, the trick is finding one. Most brokers will tell you that you can’t have access to wholesale mortgage rates because they’re protecting their commission from Yield Spread Premium. Despite this, getting wholesale rates when mortgage refinancing is easier than you think; you don’t even have to be a finance guru to pull it off.
Just to drive my argument home against mortgage refinancing Yield Spread Premium here is a quick example to illustrate your potential savings. Suppose you’re looking for a refinancing mortgage loan of $300,000. Your broker quotes you an interest rate of six percent and we’ll say only charges you one percent for loan origination. If you agree to this refinancing mortgage loan your monthly payment will be $1,798 and you’ll pay $3,000 at closing for loan origination. While this origination fee is perfectly reasonable what your broker isn’t telling you is that they’ve marked up your interest rate from 5.25 percent to collect three percent Yield Spread Premium from your lender. That’s $9,000 on top of the $3,000 you’re already paying them for arranging your refinancing mortgage loan.
What does this unwanted mortgage refinancing markup do to your monthly payment? If you had the interest rate you deserve when mortgage refinancing at 5.25 percent your payment would only be $1,660 a month! That’s a difference of $138 per month or a whopping $1,656 a year! Could you put $1,656 every year to good use? Of course you can! Avoid mortgage refinancing Yield Spread Premium on your next home loan and you’ll do just that.
You can learn more about avoiding unnecessary markup of your refinancing mortgage loan and other junk fees by checking out my free underground mortgage refinancing videos.
Here’s a sample that shows how your neighbors are throwing their money away from unnecessary markup and what you can do to avoid the same mortgage refinancing pitfalls.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
