If you are refinancing your home mortgage this holiday season there are several things you need to know in order to avoid paying too much in fees and finance charges.
While mortgage rates are at their lowest levels in 50 years there are a number of junk fees and mortgage broker tricks that can quickly turn a good deal into a horrible mistake. Here are several tips to help you keep more of your money this holiday season when refinancing your home mortgage loan.
Beware Yield Spread Premium
Yield Spread Premium isn’t as scary as it sounds and is a fairly simple concept to wrap your head around even though most homeowners have never heard of it. Simply put this is the markup of your mortgage interest rate by the mortgage company or broker for a commission. Don’t think you’ll be getting away from mortgage rate markup by refinancing with your bank; you’ll pay the same markup or more refinancing with a bank or credit union, the markup just goes by another name. See Service Release Premium for more about this type of markup by a bank or credit union.
How does Yield Spread Premium work? Lenders pay mortgage companies and brokers a commission for locking and closing mortgage loans with above market rates. For every .25 percent you agree to overpay when locking and closing your new home loan the mortgage company or broker arranging your loan is paid one percent of your loan amount as a commission. This commission is paid in addition to any fees you pay for loan origination, including junk fees the mortgage company slips past you.
Don’t Pay Too Much for Your Next Mortgage Loan
Avoiding Yield Spread Premium and junk fees is easier than you think. It’s all about negotiation with your mortgage broker to pay a flat origination fee without commission based markup of your mortgage rate. There are brokers out there willing to work for a flat origination fee of one percent without marking up your mortgage rate for a commission. If you can find a broker like this you’ll be able to take advantage of wholesale mortgage rates when refinancing, saving yourself thousands of dollars every year you keep the loan.
How to Find The Right Mortgage Broker
Finding the right mortgage broker for the job isn’t as hard as it sounds. The ideal mortgage broker does not work for a large firm or Internet website. They are self-employed, have five to ten years of experience, and if you can find one that works out of the home, even better. Why would you want a self-employed, homebound mortgage broker? These brokers do not employ expensive sales staff and do not pay for posh office spaces…therefore their overhead is much lower or non-existent. This mortgage broker is much more likely to negotiate with you over their commission than the fast talking salesperson sitting in a posh office.
You can learn more about refinancing your mortgage this holiday season without paying too much by registering for the free mortgage videos found on this website. Register today and you’ll receive a list of mortgage brokers in your area that do not markup mortgage rates for a commission and you’ll be on the road to saving thousands of dollars on your next mortgage loan.
Happy Holidays!
Robert
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.
