If you are a Florida homeowner considering a home mortgage refinance, you should know that mortgage lenders are aggressively seeking loans from the State of Florida, and now is an excellent time to refinance your home loan.
Just because lenders are actively seeking Florida home mortgage refinance loans doesn’t necessarily mean you’ll get a good deal. Here are several tips to help you avoid paying too much for your next Florida home mortgage refinance loan.
Yield Spread Premium: What Every Homeowner Should Know
Did you know the mortgage quotes you receive online and from your local banks and mortgage companies have all been marked up to create a commission for the person arranging your loan? This markup is known as Yield Spread Premium and is simply a percentage of your loan amount created when the mortgage company or broker locks and closes your home loan with an above market mortgage rate. This percentage is a cash amount paid to the broker for overcharging you…often without your knowledge or consent.
Yield Spread Premium is a fee paid by the lender to the mortgage broker in addition to any origination or junk fees you might have unknowingly agreed to pay. According to the Secretary of Housing and Urban Development Yield Spread Premium will be responsible for homeowners in the United States overpaying nearly sixteen billion dollars this year alone…don’t let your Florida home mortgage refinance loan become part of this statistic. It is possible to refinance your mortgage with a wholesale mortgage rate while paying only a one percent origination fee to the broker.
Good Mortgage Brokers Are Not Hard to Find
Finding an honest mortgage broker to arrange your Florida Home mortgage refinance is not as difficult as you might think. The ideal mortgage broker does not work for a large nationwide company but is a small time, self-employed professional. Find a mortgage broker working out of their home? Better still. The reason the ideal broker should be a small, self-employed, business owner is that large brokers working out of expensive offices that employ sales staff are not going to be willing to negotiate the kind of deal you’re looking for.
These brokers have too much overhead to discount their commissions to give you a good deal…the more you overpay, the larger their commissions are with Yield Spread Premium. So how do you get a wholesale mortgage rate when refinancing without paying junk fees? First, you need to learn how to recognize Yield Spread Premium in your loan documents.
How to Spot Yield Spread Premium
The first opportunity you’ll have to catch Yield Spread Premium and thus determine if you’re working with an honest mortgage broke is when you lock in your mortgage rate. The most important thing you need to know about locking in your mortgage rate is that it must be done in writing. When it comes to your mortgage loan, actually anything to do with your finances, verbal agreements are meaningless. You must lock your mortgage rate in writing or you have not locked at all.
Make sure the written confirmation you get from your broker after locking your mortgage rate comes from the lender and is not something your broker typed up. Dishonest mortgage brokers will give you rate lock confirmations typed up on their own letterhead and often tell you that the rate lock is “proprietary” or “confidential” from the lender. This is a load of crap and they are simply trying to hide the Yield Spread Premium on your loan. Rate lock confirmation from the lender will clearly indicate your mortgage rate, lock duration, any points on the loan AND Yield Spread Premium being paid to the mortgage broker.
If you’ve decided that a new Florida home mortgage refinance loan makes sense for your financial situation and you don’t want to overpay for the loan avoiding Yield Spread Premium and other junk fees can save you thousands of dollars every year. You can learn more about refinancing with a wholesale mortgage rate while avoiding these lender junk fees by registering for the free mortgage videos available on this website.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
