If you’re in the market to refinance your home with a fixed rate mortgage there are several things you’ll want to know to avoid overpaying. Most people focus on finding the lowest mortgage rates and often overlook junk fees and markup when refinancing. Here’s what you need to know about Today’s Fixed Mortgage Rate when refinancing your home to avoid paying too much.
Today’s Fixed Mortgage Rate
You might have come here using a search engine looking for today’s lowest fixed mortgage rates. While it’s easy to collect fixed mortgage rate quotes using the Internet, what you might not know is that ALL of the quotes you find online and out of the phone book have been marked up to create a commission for someone. No big deal…mortgage brokers gotta eat too right? Actually, that’s why you pay a loan origination fee. The person arranging your home loan should get paid for their work; however, you should draw the line when the mortgage broker takes a SECOND commission at your expense.
That’s right, many mortgage brokers structure their loans to double, often triple their commission at your expense by marking up your mortgage rate without telling you. Sure, if you’re dealing with a mortgage broker they have to disclose the fee they’re receiving for this markup but most have clever ways of disguising what they’ve done. Your mortgage broker might even tell you not to worry about this fee because the lender’s paying it and it’s not coming out of your pocket. Banks on the other hand are exempt from disclosure rules and don’t have to tell you how much money they’re making off your loan…reason enough to avoid banks altogether when refinancing your home.
How to Get the Best Fixed Mortgage Rates
In order to get the lowest fixed mortgage rates when refinancing your home you’ll need to know more about how loan originators are compensated. Your mortgage loan originator is simply the person arranging your home loan…it doesn’t matter if you are refinancing or if this is a new mortgage to purchase your home, they all generate the same fees and commissions. The first fee you need to be concerned with is the loan origination fee. Often called origination points, this is the fee paid to the mortgage company or broker arranging your loan and should not be more than one percent of your loan amount. The second way mortgage companies and brokers are compensated for their work is the fee called Yield Spread Premium.
What You Need to Know About Yield Spread Premium
Yield Spread Premium is simply a dollar amount created when the loan originator locks and closes your home loan with a higher than necessary mortgage rate. Your mortgage broker gets this commission of one point for every .25% they markup your interest rate. Whenever you hear someone talking about points remember that a “point” is one percent of your loan amount. You will rarely find Yield Spread Premium on a Good Faith Estimate because most mortgage companies and brokers lowball fees on the Good Faith Estimate to make their loan offers seem more attractive. This is why the Annual Percentage Rate or APR is worthless for mortgage comparison shopping…it’s based on lowball figures and is little more than marketing propaganda.
How to Shop for a Mortgage Loan
Shopping for a mortgage loan isn’t like shopping for a household appliance. If you collect mortgage quotes online and from local mortgage companies and pick the lowest rate you’ll wind up with the best of the worst loan offers. Instead of shopping for the best or lowest mortgage offer it makes more sense to find the right person, an honest mortgage broker willing to work for a one percent origination fee without marking up your interest rate to arrange your next home loan. How do you find this person? Start by telling the mortgage companies and brokers you contact that you understand Yield Spread Premium and will not accept any home loan that includes this markup. Once you find a mortgage broker willing to accept your terms you’ll still need to know how to use your loan documents to keep this person honest, but you’re on the right track.
You can learn more about getting today’s lowest fixed mortgage rate without paying unnecessary markup or junk fees by checking out my free Underground Mortgage Refinancing Videos.
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