If you are considering a refinance home Mortgage there are several things to you need to know in order to avoid paying too much for your next mortgage.
Most people focus entirely on closing costs and completely overlook the number one reason that homeowners overpay. According to the Secretary of Housing and Urban Development Homeowners in the United States will overpay nearly sixteen billion dollars for their mortgage loans this year alone.
Want to know the secret to saving thousands of dollars on your next home loan? Get comfortable…I’m about to pull back the curtain on the mortgage industry’s dirtiest secret that will shave hundreds of dollars off your monthly mortgage payment.
Your Mortgage Lender’s Dirty Secret
Did you know that with the exception of bank originated home loans that mortgages are retail products? There is a wholesale lender and a loan originator acting as a middleman for a fee. Think you can get a wholesale mortgage simply by cutting out the middleman and going the lender directly? Think again, wholesale lenders all have retail divisions that deal with the public. You can only get a wholesale refinance home loan by using a mortgage broker.
So what is this dirty secret? Did you know that lenders pay mortgage companies and brokers to give you the highest mortgage rate possible? It’s true…the mortgage rate you get has more to do with how much the broker thinks you’ll overpay than what you should pay based on your credit history and financial details. Just like a used car salesman, your mortgage broker sizes you up deciding how much they think you’ll overpay…remember the saying there’s a sucker born every minute? Changes are more likely than not that this is how your mortgage broker runs their business.
Refinance Home Loan Secrets – Free Tips
If you are considering taking out a new refinance home loan you need to understand how mortgage rates work. It is your mortgage rate that makes the difference between wholesale and retail home loans. You may have heard the term “par mortgage rates” while researching mortgage lenders on the internet. Par mortgage rates are those that have not been marked up for Yield Spread Premium and do not require discount points to qualify. Your goal for your refinance home loan is to qualify for a par mortgage rate.
What Is Yield Spread Premium? Mortgage Help Is Available
Simply put, Yield Spread Premium (YSP) is a percentage of your loan amount created by the mortgage broker for locking and closing your home loan with an above market mortgage rate. That’s right; your broker marks up your mortgage rate to get a commission from the lender. Just like a used car salesman your mortgage broker is trying to place you in a loan that gives them the best commission, not necessarily one that is right for your situation.
The good news is that you can avoid this unnecessary markup of your mortgage rate can be avoided altogether. Homeowners that learn to negotiate with mortgage brokers can refinance with par rates without paying discount points or markup. You can learn more about securing a par mortgage rate for your home without paying junk fees by registering for the free videos on this website. Register today and you’ll be on the path to saving thousands of dollars on your next refinance home loan.
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.
