How can you get the lowest possible refi rates without paying junk fees and hidden markup? Should you comparison shop good faith estimates into the wee hours of the morning or focus your energies elsewhere to avoid overpaying like many of your neighbors? Here are several of my best tips for getting the lowest refi rates and not overpay your broker or lender.
Home Refi Rates & Hidden Markup
Did you know that all of the good faith estimates you get from your bank or lender include hidden markup of one kind or another to boost profit for the person arranging your loan at your expense? It doesn’t matter if the person arranging your mortgage works for your bank, is a broker or is one of those giant web sites like Lending Tree, they all markup your best mortgage refi rates for fun and profit.
Many of your neighbors choose mortgage refi rates from their bank for convenience and because of effective marketing by the bank. The problem with bank originated mortgage loans is that banks simply do not offer wholesale refi rates to their customers. Your bank makes the majority of their profits by selling your home loan to investors on the secondary market. The bank knows that home loans with higher than necessary mortgage rates bring them a premium profit; also, because your bank is exempt from the Real Estate Settlement Procedures Act (RESPA) they are not required to disclose their profit on your home loan or how much they’ve marked up your home loan.
Beware Mortgage Broker Markup
Brokers aren’t much better than banks when it comes to marking up mortgage interest rates. The difference is that brokers are not exempt from RESPA laws and are required to disclose the fee they receive for marking up your home loan along with their origination fee. This fee the broker gets for marking up up your home loan is called Yield Spread Premium and once you know about it you can avoid paying for it. Simply put, mortgage refi rates that don’t include markup for Yield Spread Premium or need points paid at closing are wholesale, or par mortgage rates.
How to Get Wholesale Refi Rates
The good news since you’ve found my site is that you can get wholesale refi rates and save as much as $1200 or more each year that you’re paying on the home loan. You can get started finding wholesale mortgage rates for yourself by changing your mindset when shopping for a new home loan. Instead of comparison shopping mortgage refi rates trying to find the best deal focus your energy on finding the right person to arrange your next home loan. Start by telling potential brokers that you understand Yield Spread Premium and will not accept any home loan that include the markup. Offer to pay a flat origination fee of one percent, which is more than reasonable, and you’ll be well on your way to saving thousands of dollars on your next home loan.
You can learn more about getting wholesale mortgage refi rates for your next home loan while avoiding junk fees by checking out me free Underground Mortgage Refinancing Videos.
Heres a quick sample to get you started by exposing one of your lender’s dirty secrets that according to the Secretary of Housing and Urban Development will be responsible for fleecing American homeowners out of Sixteen Billion dollars this year alone.
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.
I've been shopping for a mortgage broker. At least one didn't call back when I told him what I wanted. One "honest" broker wants to charge me 2 application fees, one for him and one for Wells Fargo where he says he gets his best rates from…where are these legitimate brokers anyway? It seems the best of them are on the take, worse than a used car salesmen with a line of confusopoly that makes my head spin. Help!
Hi Mary,
I would say start in the phone book and look for self-employed mortgage brokers. If you find one working from home that's even better. These brokers don't have the overhead that comes from employing sales staff and working out of posh office spaces. Be upfront with them about YSP and offer to pay a one percent origination fee. You might want to check out the free videos on this site as they'll show you how to further negotiate this deal and you get a list of upfront brokers in your area when you register.
Good luck!