Most homeowners focus solely on finding the lowest mortgage rate when refinancing their home loans. While qualifying for the lowest refinancing mortgage rate will get you a lower payment and save you money, there are a number of other fees you should not overlook. Here are several tips to help you get the best refinancing mortgage rate without overpaying lender junk fees.
If you are looking at refinancing mortgage rates online, you’ll want to be careful to avoid computerized loan origination fees. This fee is often tacked onto your loan by the mortgage website you visited to fill out a contact form. The most notorious example of the computerized loan origination fee gone wrong is Lending Tree.
When Lenders Compete, You Lose
Mortgage lead generation sites like lending tree actually have nothing to do with mortgage loans whatsoever. Surprising? These websites have huge advertising budgets and put up a flashy website to trick homeowners into filling out their contact forms without reading the fine print. Check out the fine print on Lending Tree’s website; you’ll find it under Licenses and Disclosures.
Read this disclosure statement carefully and you’ll find that Lending Tree receives a fee of up to $1,300 for their part in “arranging” your loan. Lending Tree simply sells your information to the highest bidder on it’s “network” of mortgage lenders and collects their fee. This is a fee that appears on your Good Faith Estimate and is paid out of your pocket just because you filled out a contact form on Lending Tree’s website. The bottom line when shopping for the lowest refinancing mortgage rate online is to always read the fine print.
Avoiding YSP Can Get You A Wholesale Mortgage Rate
Another problem with finding the best refinancing mortgage rate is that most homeowners don’t know their interest rate has been marked up to give the broker a commission. Mortgage loans are considered retail products and the interest rate is what makes your mortgage “retail.” When you were approved for your refinancing mortgage rate your loan originator was given a specific interest rate for your loan; however, this person overcharges you to get a bonus form that lender.
That’s right, for every quarter percent you agree to overpay for your refinancing mortgage rate, that person gets a bonus of one percent of your mortgage amount from the lender. This bonus is paid in addition to the fees you’re already paying for their services. How can you avoid this ridiculous markup of your refinancing mortgage rate?
The difference between the refinancing mortgage rate you were approved and the one you close with is called Yield Spread Premium or YSP. If you’re upfront with your mortgage broker when comparison shopping and tell them you understand how YSP works and will not tolerate this lender paid compensation, you can negotiate for a wholesale interest rate. You can learn more about finding the perfect refinancing mortgage rate without paying lender junk fees with our free mortgage toolkit. Sign up today by clicking the DVD image at the top of this page.