Mortgage Brokers can be an excellent resource for mortgage refinancing if you find the right broker to work with. Before entering into an agreement with a broker there are several important questions you need to have answered.
The first thing you need to make clear to any potential mortgage broker is that you fully understand how Yield Spread Premium works, know how to find it in your mortgage, and simply won’t stand for it in your mortgage interest rate. If you’re new to RefiAdvisor, this site focuses on educating homeowners about the hidden markup of their mortgage interest rate that serves only to boost the commission of the individual that originated the loan.
In a nutshell, when your loan application was approved, you qualified for a specific mortgage interest rate. Your loan officer marked this rate up because the wholesale lender pays them a bonus of one percent of your mortgage amount for every quarter percent they mark up the mortgage rate. The difference between the mortgage rate you qualified and the rate you locked and closed is Yield Spread premium.
When negotiating with potential mortgage brokers the first thing you want to tell them is that you will not accept a mortgage that includes Yield Spread Premium. Tell the broker you will pay a reasonable origination fee for their services. A reasonable origination fee is 1% of your loan amount. Ask the broker to see the Good Faith Estimate before submitting your application and the rate lock from the wholesale lender once your application is accepted. You will be able to spot any Yield Spread Premium on the lock confirmation from the wholesale lender.
An honest mortgage broker will agree to these terms and you will save yourself thousands of dollars and many headaches. Lastly, when you negotiate with potential mortgage brokers try and deal with the owner of the firm in question. Loan representatives may not be able to broker a deal with these terms so it’s best to start from the top.
You can learn more about your mortgage refinancing options without overpaying with my Underground Mortgage Videos.
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.
