Looking for the best refi rates for your next home loan but want to avoid unnecessary markup and junk fees? Did you know that hidden markup of even the best refi rates will result in homeowners in the United States overpaying sixteen billion dollars this year according to the Secretary of Housing and Urban Development? Here are several of my most effective money-saving tips to help you get the best refi rates without hidden junk fees for your next home loan.
Best Refi Rates Online
It’s true that Internet can be a great resource for finding the best refi rates; however, what you might not know about these rate quotes is that they all include hidden markup intended to create a commission for the person arranging your home loan. There’s nothing wrong with your broker getting paid for their work, that’s what the loan origination fee found on your HUD-1 Settlement Statement is for. The problem is that banks and many brokers use hidden fees for their best refi rates to double, even triple their commission. This comes at your expense in the form of higher than necessary payments.
Hidden Mortgage Rate Yield Spread Premium
How does this hidden commission from your best refi rates work? Lenders reward brokers and companies like Lending Tree for locking and closing your home loan with higher than necessary interest rates. You’re not really getting the best refi rates available when the broker is marking up your interest rate behind your back to get a commission from the lender are you? For every .25 percent that the broker marks up your best refi rates, the home loan lender pays them a commission of 1.0 percent of your home loan amount. Think of it as a kickback for the broker overcharging you that results in a significantly higher payment every month. How much higher you ask? Here’s an example to illustrate what this hidden fee known as “Yield Spread Premium” does to your monthly payments.
The Dark Side of Yield Spread Premium
Suppose for example you’re refinancing your California mortgage loan for $375,000. Your broker quotes you an interest rate of 6.25% and charges you a loan origination fee of 1.75%. This origination fee means that at closing you’ll be required to pay $6,562 for the brokers work on your home loan. If you agree to this brokers “best refi rates” for your home loan your payment on a fixed, thirty-year home loan will be $2,308 a month. This seems like a pretty straight forward refi; however, the problem aside from the loan origination fee is what your broker isn’t telling you.
You should never agree to pay more than one percent for the broker fee. This is a perfectly reasonable loan origination fee for their work on your loan. The problem with this and nearly all of the home loans in place with your neighbors is that the so called best refi rates include hidden Yield Spread Premium. In this example what your broker isn’t telling you is that you actually qualified for a 5.5% interest rate but your broker marked it up to collect 3.0 percent Yield Spread Premium, a whopping $14,062 commission from the lender for locking and closing your home loan with a higher than necessary home loan rate.
If you had the interest rate you deserve at 5.5% your payment on the same 30 year, fixed-rate home loan would only be $2,129 per month. That’s a difference of $2,148 of your cash gone every year you keep this lousy home loan. Want to put this $2,148 back in your pocket every year while getting the best refi rates available?
You can learn more about getting the best refi rates without paying junk fees or the unnecessary commission that drives your payments up thousands of dollars by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample to get you started today by blowing the lid of the mortgage industry’s dirty little secret that’s costing your neighbors in the United States sixteen billion dollars this year alone.
I would like to refi my house of four and half years with an already 6.375% int. rate. Is there a way I can avoid paying closing costs? I bought the house @ $115,000 and now I have it at $107,049. Well the mortage co. wants me to pay appraisal fee and the new loan amt will be $113,000. To me thats alot of closing fees.