If you are considering home loan refi there are a number of pitfalls that can result in overpaying thousands of dollars. Did you know that your neighbors are literally throwing away thousands of dollars from their home loan refi because of hidden markup?
In fact, this hidden markup is so bad that the Secretary of Housing and Urban development said it would be responsible for fleecing American homeowners like your neighbors out of sixteen billion dollars this year.
Here are several of my best home loan refi tips to help you avoid the same expensive mistakes your neighbors fell victim to.
Home Loan Refi Markup & Junk Fees
What is this hidden markup I’m talking about? It’s actually a hidden commission intended for the person arranging your mortgage. Loan originators like brokers and websites like Lending Tree collect a fee known as Yield Spread Premium for locking and closing your home loan refi with a higher than necessary mortgage rate. This higher than necessary interest rate results in monthly payments that are as much as $100-200 more than they should be for the entire duration of your loan.
Yield Spread Premium in Action
Here’s an example to illustrate how accepting Yield Spread Premium on your home loan refi affects your bottom line. Suppose you’re in the market for a home loan refi of $250,000. Your broker quotes you a mortgage rate of 6.5%; however, what you don’t know is that the wholesale lender actually approved you for 5.75%. The broker marked up your rate to collect Yield Spread Premium from the lender. For every .25% that you unknowingly agree to overpay the broker pockets a kickback from the lender of one percent of your mortgage amount. In this example, the broker pocketed 3%, a whopping $7,500 for overcharging you. This is of course on top of any loan origination fees you agreed to pay for this person’s work.
What about your mortgage payments? If you had the interest rate that you deserve at 5.75% your payment on a thirty year, fixed rate mortgage would be only $1,450 per month. Because the broker overcharged you for a kickback from the lender known as Yield Spread Premium, your payment at 6.5% will be $1,580 per month. That’s a difference of $1,560 per year! You’re almost making an extra payment every single year because the broker ripped you off on your home loan refi!
How to Get Wholesale Mortgage Rates
The good news is that you can forego the same home loan refi mistakes your neighbors made with a wholesale mortgage rate and save thousands of dollars every year over the life of your loan. You don’t even have a personal finance guru or have a broker in the family to pull this off, you just have to find the right person to arrange your next mortgage loan.
You can learn more about getting a wholesale mortgage rate on your next home loan refi by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample to get you started trimming thousands of dollars worth of fat from your payments.