If you are in the process of refinancing your home mortgage and don’t want to overpay refinance fees when taking out a new loan, there are many junk fees you’ll need to avoid to ensure that you’re getting a good deal.
Most of the junk fees you’ll encounter when mortgage refinancing are from the person originating your loan and can be avoided if you know how. Here are several tips to insure you’re not overpaying refinance fees on your next mortgage loan.
Mortgage Loan Origination
What is mortgage loan origination anyhow? Can’t you just go to your bank or credit union and cut out the middleman when refinancing to get the best deal? You could go to your bank to refinance; however, because of a little known loophole in the Real Estate Settlement Procedures Act the bank can charge you the same fees you’ll pay with a mortgage broker and doesn’t even have to disclose them to you. That’s right, banks are the worst deal in mortgage loans thanks to the Banking Lobby which spent millions of dollars lobbying congress to be exempt from disclosure laws that protect homeowners from predatory lending practices.
Mortgage Broker Fees
Since banks are out of the picture due to unfair lending practices, the best option for your next mortgage loan is use a mortgage broker to arrange your loan for you. You don’t want just any mortgage broker since dishonest brokers pad their commissions with junk fees and mortgage rate markup; you’ll need to find an honest broke willing to work for a one percent origination fee…more on this later.
The first thing you need to know about refinance fees is that mortgage loans are retail products. The person arranging your loan is simply reselling loans from a wholesale lender for a commission. This commission comes from two sources: you and the mortgage lender. You’ll pay for mortgage loan origination by paying a flat origination fee. Ideally loan origination fees should only be one percent of your loan amount, which isn’t hard to negotiate; however, many mortgage brokers charge anywhere from two to five percent so you’ll want to be careful with this fee.
Yield Spread Premium
The second way mortgage brokers get a commission for their work is form the lender. Mortgage lenders pay a commission to the broker for locking and closing your loan with a higher than necessary interest rate. This markup of your mortgage rate creates a cash bonus for the broker for overcharging your and is known as Yield Spread Premium. If you want a good deal on your next mortgage loan you MUST avoid Yield Spread Premium or you’ll be thousands of dollars too much for as long as you keep the loan.
Yield Spread Premium sounds scary and most homeowners have never heard of the term however, like other mortgage garbage fees it’s not hard to avoid. When you negotiate a flat one percent origination fee without Yield Spread Premium you’ll be taking advantage of wholesale mortgage rates and saving thousands of dollars in mortgage interest. The mortgage videos on this website show you exactly how to do this in an easy to follow, step-by-step guide.
Junk Refinance Fees
There are a number of other refinance fees you’ll need to avoid that are pure garbage. If for instance your mortgage broker charges you a rate lock fee you’re probably dealing with a dishonest mortgage broker. There isn’t one single mortgage lender in the country that charges a fee for locking in your mortgage rate…this fee is pure garbage and headed right into your mortgage broker’s pocket if you agree to pay it. Other garbage refinance fees you should be on the lookout for include broker courier fees and loan processing fees.
You can learn more about refinance fees you need to avoid including strategies for refinancing your home loan with a wholesale mortgage rate by registering for my Underground Mortgage Videos available on this website. You’ll get immediate online access to the mortgage videos and all refinancing materials in our password protected member’s area.