If you’re like many homeowners you’re tirelessly searching the internet for “Today’s Mortgage Rates” trying to get the best deal when refinancing your home loan. There’s something you probably don’t know about today’s mortgage rates that is the reason most of your neighbors pay too much for their home loans. Here’s what you need to know about today’s mortgage rates to avoid overpaying like your neighbors when refinancing your home mortgage online.
Today’s Mortgage Rates Online
Try searching Google for “Today’s Mortgage Rates” and you’ll find all the usual suspects: BankRate, Wells Fargo, Amerisave and Lending Tree competing for your attention with promises of the lowest rates and fees around. What you might not know about today’s mortgage rates is that all of the mortgage rate quotes you find have been marked up in one way or another to create a profit for someone. Banks do it, mortgage brokers do it, and so do the Lending Trees and other mortgage websites of the world; they all mark up mortgage rates to boost their profits at your expense.
Unwanted Mortgage Rate Markup
Everyone wants the lowest mortgage rate when refinancing their home…the problem is most people don’t understand how mortgage rates work and therefore accept inflated mortgage rates because they just don’t know better. This is why almost all of your neighbors overpay their mortgage lenders month after month, throwing thousands of dollars away unnecessarily. How does this mortgage rate markup work? It depends on the type of lender as to what it’s called but the end result is the same…unnecessarily higher mortgage payments.
If you turn to your bank looking for today’s mortgage rates the banker will swear you’re getting a “good” mortgage rate that hasn’t been marked up for their commission. The banker will even show you the bank’s mortgage rate sheets claiming they’re not paid a commission of any kind. What the banker isn’t telling you and probably isn’t aware is that the bank’s profits come from Service Release Premium. Banks generate Service Release Premium on their home loans when sold to investors on the secondary mortgage market. Home mortgage loans with higher than necessary mortgage loans bring the bank a premium profit so the bank’s mortgage rate sheets have this premium built into them. Your mortgage banker is showing you rate sheets that include Service Release Premium and thanks to a little known loophole in the Real Estate Settlement Procedures Act the bank isn’t required to tell you anything about their markup of your mortgage rate or profit margin on your loan.
Banks aren’t the only ones that markup your mortgage rate for fun and profit…mortgage brokers do it too. When your mortgage rate is marked up by a mortgage broker or company that doesn’t fund home loans with their own cash (in other words the mortgage is funded by a wholesale lender), the profit generated for the person arranging your loan is called Yield Spread Premium.
Yield Spread Premium is a cash percentage of your mortgage loan amount created for the person arranging your home loan when they lock and close your home loan with a higher than necessary mortgage rate. Wholesale lenders reward mortgage brokers and other loan originators with a fee of one percent for every .25 percent that they markup your mortgage rate. This fee is known in the industry as Yield Spread Premium, which just like your bank’s Service Release Premium results in higher than necessary mortgage payments for you.
Most mortgage brokers don’t like to talk about Yield Spread Premium because this unnecessary fee is a significant part of their bottom line and will often double, even triple their commission on your home loan. Let me clarify one thing about Yield Spread Premium…I say this is an “unnecessary fee” for you because you’re already paying this person a perfectly good origination fee for their work refinancing your home loan. Many brokers take this commission from the lender on top of your origination fee without telling you what they’re doing and go to great lengths to hide the markup in your loan documents. Many mortgage brokers become defensive even angry when questioned about Yield Spread Premium; if your mortgage broker does this it is a clear indication that you need to find someone else to arrange your next home loan.
Beware Computerized Origination Fees
Another thing you need to know about today’s mortgage rates on the internet is that many sites like Lending Tree have hidden fees lurking in the fine print. Lending Tree for example offers quotes from their “network” of lenders that pay a fee known as a Computerized Origination Fee to get your information when you fill out that form on Lending Tree’s site. This Computerized Origination Fee is passed on to you the homeowner and is found on your Good Faith Estimate. Should you pay a fee for someone like Lending Tree to sell your information to the highest bidder? Probably not…always check the fine print before applying for a mortgage loan from someone like Lending Tree.
How to Avoid Mortgage Rate Markup and Junk Fees
What’s the best way to refinance your home without a marked up mortgage rate or junk fees? Shopping for today’s mortgage rates doesn’t mean scouring the web trying to find the lowest mortgage rate…that’s what your neighbors did and remember they’re overpaying as you read this. The way to get the lowest possible mortgage rate, which in the business is called a par mortgage rate, is not to find the best mortgage quote but to find the right person to arrange your next home mortgage loan. Find the right mortgage broker to arrange your home loan and you’ll not only get a par mortgage rate but you’ll be able to avoid lender junk fees in the process. What’s a par mortgage rate you ask? Simply put, a par mortgage rate is one that doesn’t cost you anything to get (you don’t pay points) and does not create Yield Spread Premium for the mortgage broker or Service Release Premium for the bank.
I can tell you that banks simply do not offer their customers par mortgage rates so don’t waste your time asking…the mortgage banker probably doesn’t even know what a par mortgage rate is. Mortgage brokers are definitely the way to go when refinancing your home as they have access to wholesale mortgage rates and have the ability to pass these par rates on to their customers…you just have to find the right mortgage broker for the job.
You can learn more about Today’s Mortgage Rates and the finding the right person to arrange your next home loan by checking out my free underground mortgage refinancing videos.
Here’s a sample of what you get with my free mortgage videos today. Sign up today and you’ll get a list of mortgage brokers in your area that offer wholesale rates to get you started on the right path for your next home mortgage loan.