Considering refinancing your home mortgage loan this year?
A home mortgage refinance can save you a lot of money if you go about it the right way. Did you know the mortgage rate you have on your home now was marked up by the person arranging your loan for a commission?
You’ve been paying too much ever since purchasing your home just to give that mortgage broker a commission from the lender. Don’t worry; you’re not alone… in fact, according to the Secretary of Housing and Urban Development this hidden mortgage commission will cost homeowners in the United States sixteen billion dollars this year alone. Want to save a few thousand bucks on your next mortgage loan? Read on… I’ve got the low down on refinancing your home loan for you without paying too much for your next mortgage loan.
Home Mortgage Refinance Tips
You don’t have to be a financial guru to get a good deal on your next mortgage loan. Mortgage loans are retail products like anything else you buy today; you just need to know how to recognize and avoid the crap people are shoveling to make a buck at your expense. Mortgage brokers have earned themselves a reputation for being sleazy used car salesman in recent years… and rightly so. This doesn’t mean you should avoid using a mortgage broker when refinancing your home. Mortgage brokers have access to wholesale mortgage rates which is something you’ll never get from a bank or credit union.
Wholesale Mortgage Rates
You’re familiar with wholesale prices when it comes to retail products but what about mortgage loans? Mortgage rates are no different; in fact, home loans are retail products being resold by mortgage companies and brokers for a commission. How to mortgage companies and brokers make their money? They make money from two places: you and your mortgage lender.
Your mortgage company or broker can charge you an origination fee, often called “origination points” for their part in arranging your home loan. This fee is often overcharged. A reasonable fee for loan origination is one percent of your mortgage amount but it’s not uncommon to see this fee as high as three to five percent. Never pay this much for a mortgage broker origination fee.
The second source of compensation for your Mortgage Company or broker is a little known kickback called Yield Spread Premium. Simply put this is a fee paid by the lender when your loan originator locks and closes your home loan with a higher than market mortgage rate. You’ll see market or the so called wholesale mortgage rates referred to as par mortgage rates.
Par Mortgage Rates
A par mortgage rate is simply one that does not cost you anything to get or create any money for the Mortgage Company or broker arranging your home loan. Mortgage rates that cost you money require discount points be paid at closing. Remember that one point is one percent of your mortgage amount and a discount point is a fee paid to lower your mortgage rate. If you have to pay cash at closing to qualify for a specific mortgage rate this is not a par rate; likewise if your mortgage rate creates a commission for the broker it is not a par rate either. If you want the best possible deal when refinancing your home loan you want to get as close to a par mortgage rate as possible.
Avoiding the unnecessary markup of your mortgage rate to generate a commission for the mortgage broker is easier than it sounds. You just need to find the right broker for the job and forget about refinancing with your bank or credit union. Banks fund their loans with the banks money and are not required under the current disclosure laws to tell you how they’ve marked up your interest rate. Compare a par rate to your banks “great deal” and you’ll see how much they overcharge their customers.
You can learn more about a Home Mortgage Refinance with par mortgage rates without paying lender junk fees in the process by registering for my free Underground Mortgage Videos. Register Today and you’ll have immediate access to the membership area without downloading anything to your PC.