If you’re a homeowner searching for current home mortgage interest rates there are several things you need to know about the way mortgage rates are quoted to avoid paying too much for your home loan. Mortgage rates, like most of the retail products you buy, have been marked up to put your money in someone else’s pocket. Avoiding this unnecessary markup of your interest rate could not only save you thousands of dollars in junk fees but allow you to exploit the wholesale nature of the interest rates offered by mortgage brokers. Here are several of my best tips to help you secure the lowest current home mortgage interest rates for your next home loan.
Mortgage Broker Compensation
The first thing you need to know about current home mortgage interest rates is that there are several ways the person arranging your home loan gets paid. This person, known as the loan originator, could be a mortgage broker, a bank or a faceless web site like the Lending Trees of the world. These loan originators get paid by charging you a loan origination fee, slipping you various administrative junk fees, and by marking up your mortgage rate to collect a fee from the lender. This fee paid by a wholesale lender to loan originators that close home loans with higher than necessary interest rates is the reason 98% of your neighbors pay too much year in and year out. This unnecessary markup is so bad that the Secretary of Housing and Urban Development said it will cost homeowners six billion dollars this year alone.
Current Home Mortgage Interest Rates
How can you find current home mortgage interest rates that don’t include this unnecessary gouging? First and foremost, forget Lending Tree and the other faceless Internet giants. If you want a wholesale mortgage rate for your next home loan you need to find someone local to strike the deal for you. Next, forget your bank. Banks, unlike mortgage brokers do not offer home loans from wholesale lenders. Because banks fund their home loans with the bank’s money they are exempt from key disclosure laws that protect homeowners from predatory lending practices. Wells Fargo for example is exempt from the Real Estate Settlement Procedures Act and has earned a reputation as one of the worst predatory lenders of all time.
So what exactly is a wholesale mortgage rate and how can you find one when wading through current home mortgage interest rates? Simply put, a wholesale mortgage rate is one that has not been marked up to create a commission for anyone and does not cost you discount points to get. Remember discount points are a fee you pay upfront for lowering your rate. Some banks and lenders dangle ultra-low “teaser” rates in front of their customer and then charge them a ridiculous amount of points in order to qualify. Wholesale rates, also known as par mortgage rates won’t cost you discount points and do not create Yield Spread Premium for the loan originator.
How to Get a Wholesale Mortgage Rate
Getting wholesale mortgage rates is not hard and you don’t have to be a financial guru to pull it off. You just have to find the right person to arrange your next home loan. Since we’ve already ruled out banks let’s talk about mortgage brokers, specifically the local, self-employed variety. Mortgage brokers in business for themselves, the self-employed variety do not have the overhead of large national chains. If you can find a broker working from home they’ll be much more likely to negotiate the type of deal that nets you a wholesale mortgage rate than one working out of a posh office space that employs expensive sales associates. Start by offering potential mortgage brokers in your area a flat origination fee of one percent which is perfectly reasonable for the work they do. Tell these mortgage brokers that you understand how Yield Spread Premium works and will not accept any home loan that includes this unnecessary markup. There are plenty of honest, hardworking brokers out there willing to work for these terms, you just need to find one and you’ll be well on your way to a wholesale rate without paying junk fees.
You can learn more about finding current home mortgage interest rates that don’t include unnecessary markup or junk fees by checking out my free underground mortgage videos.
This video shows why nearly all of your neighbors are paying too much for their homes and how you can avoid making their mistake.
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.
