If you’re trying to get the lowest daily mortgage rates for your next home loan you already know that interest rates change fast. What you might not know is that daily mortgage rates include hidden markup to create an unnecessary commission for the person arranging your home loan. This hidden markup of all daily mortgage rates drives up your payments by hundreds of dollars every month! Here are several of my best tips for getting the lowest daily mortgage rates that don’t include hidden markup intended to put your cash in someone else’s pocket.
Daily Mortgage Rates & Yield Spread Premium
Yield Spread Premium is a term most of your neighbors have never heard of and the reason they will overpay nearly sixteen billion dollars this year according to the HUD Secretary. What is Yield Spread Premium and how is stealing from unknowing homeowners? Simply put, it’s a kickback from the lender for overcharging you. Some people think that changes to RESPA laws in 2010 outlawed Yield Spread Premium; however, this this simply not true. The law only requires that mortgage brokers, not banks because they’re still exempt, disclose Yield Spread Premium alongside their origination fee.
Speaking of that mortgage loan origination fee, you’re already paying the person arranging your home loan a perfectly reasonable amount for their work. Any Yield Spread Premium they take for marking up their daily mortgage rates on top of this origination fee is not only unnecessary but also downright dirty.
Here’s an example to illustrate how this hidden markup of your daily mortgage rates affects your bottom line. Suppose you’re refinancing your home for $350,000. Your broker quotes you daily mortgage rates before locking of 6.5%. You’ll be required to pay an origination fee of 2.25%; however, the broker tells you there are no points required so this is good deal. The first thing you need to look at is that loan origination fee. 2.5% is highway robbery in this or any other economy. A reasonable amount to pay for the broker’s services is 1.0% and not a penny more. How about that hidden lender kickback I was telling you about?
Yield Spread Premium is a Kickback
What you don’t know about this home loan is that you could have had a mortgage rate of 5.75%. The broker marked it up to 6.5% to collect a kickback from the lender of 3% of your loan amount. That’s right, for every .25% that you unknowingly agree to overpay for daily mortgage rates the person arranging your home loan pockets 1% of your loan amount. That’s 3% on top of the 2.5% you’re already paying for the broker’s origination fee. However, remember the broker said there’s no points required so this is a really good deal for you. Most brokers have clever ways of hiding or explaining away their markup of your daily mortgage rates and get very defensive when you start questioning them about Yield Spread Premium.
What about your monthly payments? What does this hidden markup do to your bottom line in real dollars? At 6.5% your payment on a 30 year, fixed-rate home loan will be $2,212. If you had the daily mortgage rates you deserve at 5.75%, your payment would only be $2,042 per month. That’s a difference of $170 per month, a whopping $2,040 per year you’re overpaying because your broker ripped you off.
How to Get the Lowest Daily Mortgage Rates
You don’t have to stand for this unnecessary markup of your next home loan. Instead of comparison shopping Good Faith Estimates like your neighbors did, you can get wholesale mortgage rates simply by finding the right person to arrange your next home loan. Start by telling prospective brokers that you understand how Yield Spread Premium works and will not accept daily mortgage rates that include the markup. Offer to pay a flat fee of one percent for loan origination and you’ll be well on your way to saving thousands of dollars every year with a wholesale mortgage loan.
You can learn more about getting a wholesale mortgage without junk fees by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample to get you started with tips that save the average homeowner $1200 every year…best of all the videos are totally free.