If you are an Arizona homeowner concerned with rising mortgage interest rates, you might be looking to refinance your existing mortgage, especially if your current loan is an Adjustable Rate Mortgage. Refinancing can still get you a low interest rate, if you know how to negotiate for wholesale rates. Here are several tips to help you with your Arizona refinance mortgage rate.
When you hear someone talking about wholesale mortgage interest rates you might wonder what makes an interest rate “wholesale.” Many homeowners are surprised to discover that mortgage loans are retail products just like home appliances. There is always a third party retail vendor between you and the wholesale lender. This is why you pay origination fees for your mortgage company or broker’s part in arranging your loan.
Most mortgage brokers take origination fees for granted. The retail aspect of your mortgage includes the origination fee and the broker’s markup of your interest rate. Your origination fee is more than ample compensation for the mortgage broker’s work; however, this person marks up your mortgage interest rate to get a bonus from your lender. The difference between the wholesale interest rate you were approved and the mortgage rate you close with is called Yield Spread Premium.
Why do mortgage brokers charge Yield Spread Premium? Mortgage Brokers mark up your Arizona refinance mortgage rate because the lender pays them a bonus of one percent of your loan amount for every quarter percent you agree to overpay. Fortunately, Arizona homeowners can avoid paying this unnecessary markup by learning to recognize Yield Spread Premium when refinancing. You can learn more about refinancing your Arizona mortgage without paying too much with our free mortgage refinancing toolkit.