If you’re in the process of shopping for a home loan you may be searching online for the best refinance mortgage interest rate. Getting the lowest possible mortgage rate means understanding how mortgage interest rates work as well as how mortgage brokers are compensated for the loans they close. Here are several of my best mortgage shopping tips to help you get the best refinance mortgage interest rate for your next home loan.
Refinance Mortgage Interest Rate Shopping
What’s the best way to shop for a home loan when refinancing? Is it beating the pavement collecting Good Faith Estimates from every Mortgage Company and Internet mortgage site out there picking the one with the lowest fees and rates? How do you compare loan offers ensuring that you’ll recognize the best deal when you find it? This is how most homeowners compare mortgage offers and the reason that nearly all of your neighbors are paying too much for their home mortgage loan. If you want the best refinance mortgage rate for your next home loan you’ll need to not only to compare apples to apples when shopping but find the right person to arrange your home loan without marking up your mortgage rate or charging you junk fees.
Mortgage Loan Originators
Finding the right person to arrange your home loan is the most important aspect of mortgage shopping. Find the right person to refinance your home and you’ll not only get the lowest mortgage rate but you’ll avoid junk fees in the process. So how do you find the right person to arrange your next home loan? Before you can find the right person to arrange your home loan you’ll need to understand how loan originators are compensated for their work. What are mortgage loan originators? Anyone that arranges your mortgage is a loan originator…this could be a mortgage company, mortgage broker or mortgage banker. Each type of loan originator has pros and cons; however, only mortgage brokers have access to and offer wholesale mortgage rates to their customers. If you want the lowest refinance mortgage interest rate you’ll need to find the right mortgage broker for the job.
Mortgage Broker Fees
Mortgage brokers are compensated in several ways for the work they do arranging your home loan. The first and most obvious way is the loan origination fee you’ll find on your Good Faith Estimate. This loan origination fee is a percentage of your loan amount that you’ll pay at closing for the mortgage broker’s work. The second and often hidden fee your mortgage broker receives is known as Yield Spread Premium. This is a fee paid by the lender when your mortgage broker locks and closes your home loan with a higher than necessary refinance mortgage interest rate. The final mortgage broker fees you’ll encounter are the junk fees the wrong mortgage broker will try and slip past you.
Best Refinance Mortgage Interest Rate
If you want the best mortgage rate for your next home loan you’ll need to find a mortgage broker willing to work for a flat origination fee without taking Yield Spread Premium on your loan. Mortgage rates that do not include Yield Spread Premium or discount points are called “Par” mortgage rates and are the lowest refinance mortgage interest rate you can get. How do you get a par mortgage rate when refinancing your home? Start by telling potential mortgage brokers that you understand how Yield Spread Premium works and will not accept any mortgage rate that has been marked up for this fee. Tell your mortgage broker you will pay a reasonable fee for loan origination; one percent is a perfectly reasonable mortgage broker fee for arranging your mortgage loan.
You can learn more about getting the best Refinance Mortgage Interest Rate without Yield Spread Premium or mortgage junk fees by checking out my free Underground Mortgage Videos.
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