Are you searching the Internet for the lowest mortgage rate and are not sure which lenders are best when refinancing your home? Do you want to avoid overpaying with a commission based mortgage rate like nearly every one of your neighbors? Here are several of my best mortgage tips to help you get the lowest mortgage rate for your next home loan.
Finding the Lowest Mortgage Rate Online
Getting the lowest mortgage rate when refinancing your home means finding a rate that hasn’t been marked up for a commission for the person arranging your home loan. You’re already paying this person an origination fee for their work on your home loan, why should they get another commission at your expense, especially when it drives up your payment unnecessarily? If you want the lowest mortgage rate for your home loan you’ll need to understand how loan originators are compensated for their work and negotiate a deal that doesn’t include unnecessary markup of your lowest mortgage rate.
Understanding Mortgage Loan Originators
Your loan originator is the person or company arranging your home loan… be it a mortgage company, broker, or banker. Different types of loan originators have advantages and disadvantages when refinancing and if you want the lowest mortgage rate you’ll need to choose the right loan originator for the job. The first kind of loan originator you’ll need to avoid are banks. The simple reason you want to avoid all banks when it comes to your home loan is that banks don’t play by the same rules as other loan originators due to a loophole in the Real Estate Settlement Procedures Act (RESPA).
Did you know that the Banking Lobby in the United States spent millions of dollars sweet talking Congress into changing the laws so that banks don’t have to play by the same rules as other originators? Thanks to this loophole your bank is not required to disclose any of their profit margin or markup on your home loan. If you refinance your home with your bank you’ll get a fictitious rate known as the Annual Percentage Rate based on the bank’s Good Faith Estimate. The Good Faith Estimate is notoriously unreliable because banks and other mortgage lenders lowball their fees to make their loan offers more attractive to homeowners. Banks don’t play by the same rules as other lenders giving them an unfair advantage over homeowners that just don’t know better.
The next type of mortgage originator you need to be aware of is known as a mortgage broker bank. When the Banking Lobby succeeded in having our RESPA laws changed a number of mortgage brokers formed lending institutions known as broker banks that funded their loans with their own money. Any lender that funds loans in this manner is exempt from RESPA and therefore does not have to disclose markup or profit margin just like your bank. Refinancing your home loan with a bank or broker bank will never get you the lowest mortgage rate.
The last type of mortgage originator I’m going to discuss today is the mortgage broker. Many homeowners avoid mortgage brokers entirely because they’ve earned themselves a reputation for ripping people off. For the most part they’ve earned the reputation they deserve because a great number of them have no scruples whatsoever and have business models based on taking advantage of people. This doesn’t mean that you should avoid mortgage brokers entirely when refinancing your home because they do have one redeeming quality: mortgage brokers have access to wholesale mortgage rates. Find the right mortgage broker for the job of originating your home loan and you’ll not only get a wholesale mortgage rate but you’ll avoid paying junk fees in the process.
What Are Wholesale Mortgage Rates?
If you want the lowest mortgage rate for your next home loan you’ll need to understand wholesale mortgage rates. Simply put a wholesale rate is one that doesn’t cost you anything to get and has not been marked up to create an extra commission for the loan originator. Some mortgage rates require that you pay discount points in order to qualify for a specific rate; wholesale mortgage rates do not have this requirement. Wholesale mortgage rates are known in the industry as par mortgage rates. You don’t have to be a financial guru to get a par mortgage rate; you simply have to find the right mortgage broker for the job.
How to find the Right Mortgage Broker
If you’re leery of refinancing your home with a mortgage broker then you’re on the right path to getting the lowest mortgage rate for your home. Local mortgage brokers that do not employ expensive sales staff or have advertising budgets and posh office spaces will be the most likely willing to negotiate the kind of deal you’re looking for when refinancing your home with the lowest mortgage rate. These mortgage brokers are typically self-employed and you may find them working out of their homes. How do you negotiate the kind of deal that gets you a wholesale mortgage rate while avoiding unnecessary fees?
Check out my free Underground Mortgage Refinancing Videos and you’ll get strategies for exploiting little known mortgage refinancing loopholes that save the average homeowner $1200 per year or more.
Here’s a sample of what you’ll get when you register today for my free mortgage videos. This module is about the commission based markup of your mortgage rate that drives your payment up by hundreds of dollars unnecessarily.
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.
