If you are considering refinancing your mortgage with a nationwide home mortgage loan company, there are several things you need to know about the junk fees you’ll be paying. Nationwide mortgage companies like Countrywide are notorious for overcharging and taking advantage of their borrowers. Here are several tips to help you avoid paying too much for your next mortgage loan.
Nationwide Home Mortgage Loan Junk Fees
If you’re using the Internet for your mortgage search you’ll need to watch out for “Computerized Loan Origination Fees.” These are fees passed on to you by a third party website such as Lending Tree for simply filling out a form on their website. This fee is frequently buried in the fine print and if you’re not careful you could be out of pocket for as much as $1300 unnecessarily. How does mortgage scam work?
Computerized loan origination fees are charged by websites engaged in lead generation. Lending Tree is one of the most notorious lead generation sites and had a class action law suite pending from 2006 for unfair business practices. These websites like lending tree actually have nothing to do with mortgage loans. They put up a fancy website, spend a small fortune advertising on television collecting your personal information, and sell it to the highest bidder.
While lead generation isn’t necessarily bad, in Lending Tree’s case it’s what they’re not telling you that will cost you money. Lending Tree claims there is no fee for using their service; however, if you read the fine print on their Licenses and Disclosure page you’ll find out that if you take out a mortgage from one of the lenders in their “network” you will have a fee on your Good Faith Estimate of up to $1300. This “Computerized Loan Origination Fee” is paid by the lender out of your pocket to Lending Tree for their part in “arranging” your mortgage.
On one hand you have Lending Tree claiming there is no fee for using their website; however, you’ll have to pay the lender this unnecessary fee because you filled out a form on Lending Tree’s website. This “little white lie” could cost you $1300! This is but one reason why choosing a nationwide home mortgage loan company might not be a smart move.
Beware Yield Spread Premium
Another thing you have to watch out for when taking out a mortgage loan is Yield Spread Premium (YSP). Never heard of it before? Most homeowners haven’t and what’s more according to the Secretary of Housing and Urban Development Yield Spread Premium will cost American homeowners $16 billion dollars this year alone. So what is YSP?
Simply put, Yield Spread Premium is the markup of your mortgage rate for a commission. This markup is what makes mortgage rates “retail.” When your mortgage broker quotes you an interest rate they base a proper quote on sixteen pieces of you financial information, including their commission based markup. Your mortgage broker knows the rate you qualify from the wholesale lender; however, they mark this mortgage rate up because the lender pays them a bonus for overcharging you. The broker receives one percent of your mortgage amount for every quarter percent they overcharge you. This bonus is paid in addition to the perfectly reasonable origination fee you are paying for their services. If you agree to pay this unnecessary markup you are effectively doubling, even tripling your mortgage broker’s commission for your loan.
The good news is that garbage fees and Yield Spread Premium can be avoided when taking out a mortgage loan. You can refinance your home with a wholesale mortgage rate without paying too much at closing. To learn more about avoiding YSP and other garbage fees charged by Nationwide Home Mortgage Loan Companies, register for a free mortgage DVD. Request yours today, the DVD is free with no obligation.
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.
