Will using a mortgage rate chart help you spot a good deal on your next home loan? How do you get a reliable mortgage rate chart and what does it mean for your bottom line? Can you use a mortgage rate chart to spot unnecessary markup and junk fees? Here are the answers you seek and several of my best tips for getting the best home loan without overpaying, despite what that mortgage rate chart may be hiding.
What is a Mortgage Rate Chart?
Ever go Snipe Hunting when you were a kid? According to Webster, a Snipe Hunt is a fool’s errand. At least back then, practical jokes didn’t cost you thousands of dollars. Shopping with a mortgage rate chart isn’t going to help you get the best home loan at the end of the day. In fact, it is little more than marketing propaganda for overpriced home loans…and here’s why. Mortgage brokers and other origination companies like Lending Tree use rate tables, also called a mortgage rate chart to make quotes that include varying degrees of hidden markup for a commission.
Yield Spread Premium is what makes home loans “retail.” Simply put Yield Spread Premium is a fee, (think of it as a kickback), from the lender to your loan originator, for locking and closing your home loan with a higher than necessary interest rate. You can comparison shop with a mortgage rate chart until the cows come home and all you’ll ever get is an interest rate that includes unnecessary markup for someone’s commission.
I get a lot of hate mail from mortgage brokers for calling Yield Spread Premium unnecessary. It’s true that brokers deserve to be paid for their work. That is the purpose of the loan origination fee. Quoting rates that include markup for Yield Spread Premium on top of the loan origination fee is just plain unethical, dishonest, sleazy, and whatever else you’d like to call it. After all, quoting from an inflated mortgage rate chart for Yield Spread Premium is what earned mortgage brokers their sleazy used car-salesman reputation.
What You Really Want is a Par Mortgage Rate
One thing you’ll never get shopping from a mortgage rate chart is a wholesale interest rate. Most brokers tell you that you can’t get Par, or wholesale interest rates simply because they want you to think their inflated rates are the best deal around. Truth be told, there are honest brokers out there willing to work for a flat origination fee of one percent without taking kickbacks from the lender on your home loan, you just have to find one.
So what is a par mortgage rate? Simply put, it is an interest rate that does not include markup to create Yield Spread Premium for the person arranging your home loan, and you don’t have to pay discount points to qualify. You can’t get Par Mortgage Rates shopping from a mortgage rate chart like most of your neighbors did, you simply have to shop for the right person, rather than the right home loan.
Who’s the right mortgage broker for the job? Start by looking for local, self-employed brokers. Find one working from home? Even better. These brokers don’t have the overhead from sales staff and posh offices spaces like you find with large faceless companies and will be much more likely to negotiate the kind of deal that I’m describing here.
You can learn more about getting a wholesale mortgage rate while avoiding hidden markup and junk fees that come with a mortgage rate chart by checking out my free Underground Mortgage Videos.
Here’s a quick sample to get you started on the road to a wholesale home loan.