If mortgage refinancing is part of your resolution for the New Year I’m sure doing it right is just as important to you as getting it done. While it’s true that mortgage refinancing can save you thousands of dollars by lowering your payments, it can also cost you thousands of dollars in hidden markup and junk fees if you go about it the wrong way. Here are several of my best tips to help you take control of your finances in the New Year with mortgage refinancing without junk fees or hidden markup. (Don’t worry I’m not here to try and sell you a home loan today; in fact, you’ll find everything on this website is free)
Mortgage Refinancing in the New Year
You’ve probably heard that many of the financial analysts are predicting that mortgage rates will inch up during the New Year; however, there are still opportunities for the financially savvy homeowner to save a boatload of cash with a new home loan. In fact, if you’re smart about mortgage refinancing you can get the same if not lower mortgage rates than many of your neighbors did for their home loans last year.
The reason your neighbors paid too much for their home loans when mortgage refinancing is due to hidden markup for a little known fee called Yield Spread Premium. Don’t sweat it if you’ve never heard of Yield Spread Premium, 95% of your neighbors haven’t either which is why they’re paying too much for their home loans. This hidden markup is so bad, that according to the Secretary of Housing and Urban Development, homeowners in the United States (your neighbors) will overpay sixteen billion dollars in the New Year for their mortgage loans.
Obviously you don’t want to be part of this statistic and you’re probably thinking to yourself “get to the point already” so here’s the simple truth you need to know when mortgage refinancing.
How to Avoid Hidden Markup and Mortgage Junk Fees
The reason your neighbors are all paying too much for their home loans is because they went shopping for a new home loan and not the right person to arrange mortgage refinancing. Think about it like this: when you go shopping for a kitchen appliance you check out the Sunday ads and the big box stores to shop around for the lowest price right? If you approach your mortgage refinancing in this way you’re simply going to end up with the best of the worst home loans out there. This is because comparison shoppers always get to compare home loans that include hidden markup for Yield Spread Premium. Back to Yield Spread Premium again, what is it you ask?
Simply put, mortgage Yield Spread Premium is a fee, think of it as a kickback, paid to the person arranging your mortgage refinancing for locking and closing the new home loan with a higher than necessary mortgage rate. I say higher than necessary because you’re already paying the person arranging your new home loan a perfectly reasonable loan origination fee so they have no business marking up your mortgage rate for a second, hidden commission from your lender.
This is why I say it’s so important to find the right person to arrange your mortgage refinancing than comparison-shopping home loan offers. So how do you find the right person for the job? It takes a bit of legwork on your part but if you go about it the right way you can slash $1,200 or more from your mortgage payments every single you’re paying on the loan.
How to Find the Right Person to Arrange Your Next Home Loan
Before you can find the right person to arrange mortgage refinancing in the New Year you’ll need to know who the right person is not. If you want the lowest possible mortgage rates without hidden markup you’ll need to stay away from banks. The reason I never recommend anyone take out a home mortgage loan from their bank is because of a gaping hole in the Real Estate Settlement Procedures Act (RESPA), which was intended to protect you and your neighbors from predatory lending practices like collecting Yield Spread Premium.
RESPA wasn’t always full of holes and almost did its job protecting the American public; however, the Banking Lobby spent millions of dollars lobbying Congress to have the law changed to exclude banks, and in the early 90s they succeeded. Your bank is only required to give you an Annual Percentage Rate (APR) based on a fictitious Good Faith Estimate and is not required to show any of their markup or profit margin on your new home loan.
If you’re considering mortgage refinancing with your bank, why would you trust your home to any lender that doesn’t have to play by the rules? I’m not a mortgage broker and I know that many of them are every bit as dirty as the worst banks (Wells Fargo and Bank of America come to mind at the top of the predatory lender list), however, mortgage brokers are not exempt from the law and recent changes in 2010 require them to show any Yield Spread Premium they receive along with your mortgage origination fee.
This is why I say it’s so important to shop for the right person to arrange your next home loan when mortgage refinancing than shopping for a home loan like it’s an appliance for your kitchen. How do you find the right mortgage broker for the job? Start by telling potential brokers that you understand how Yield Spread Premium works and will not accept any home loan that includes the markup. Offer to pay a flat fee for loan origination of one percent of your home loan amount and you’ll be well on your way to bagging a wholesale mortgage rate for your next home loan.
You can learn more about mortgage refinancing with wholesale rates by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample to get you started by exposing the mortgage industry’s dirty secret.
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.
