If you’re looking for home mortgages to purchase your home or to refinance your existing mortgage there are several things you need to know about home mortgage rate quotes to avoid paying too much. 2010 has seen some changes to the Real Estate Settlement Procedures Act; however, these changes are still too little too late when it comes to protecting homeowners from abusive lending practices. Here are several of my best mortgage tips to help you get a wholesale mortgage rate for your home mortgages while avoiding unnecessary junk fees and save as much as $1200 per year.
Home Mortgages for Dummies
Everyone wants the lowest mortgage rates for their home loans and the Internet makes it very easy to shop for mortgage rate quotes. One thing that you might not know about those mortgage rate quotes you find on the Internet and get from your local mortgage companies is that they’ve all been marked up to create a commission for the person arranging your home loan. What’s wrong with that you might ask, I mean mortgage brokers gotta eat too right? That’s why you pay an origination fee for the mortgage broker or company arranging your home loan. Origination fees paid out of pocket don’t drive your mortgage payment up, taking cash out of your pocket for no good reason. Do you really want to pay that person’s commission over and over every month that you keep your home loan?
Beware Yield Spread Premium
Driving your mortgage payment up unnecessarily is what taking a higher mortgage rate to pay the broker commission does. One of the changes for 2010 in the Real Estate Settlement Procedures Act is that mortgage brokers have to include Yield Spread Premium with their loan origination fee in your loan documents. This fee for markup of your mortgage rate has always been on the HUD-1 statement; however, shady mortgage brokers explain it away by telling you that because the fee is coming out of the lender’s pocket they don’t need to worry about it. There is nothing in the law now that prevents loan originators from doing this so it’s pretty much business as usual for dishonest mortgage brokers.
How to Avoid Unnecessary Mortgage Rate Markup
The good news for you is that you don’t have to be a financial guru to get a wholesale mortgage rate that doesn’t include this unnecessary markup or junk fees. It all comes down to finding the right mortgage broker for the job, one willing to work for a flat and perfectly reasonable origination fee of one percent. That’s what you want to pay…one percent up front that won’t drive up your mortgage rate and monthly payment for no good reason.
Finding the right mortgage broker for the job isn’t hard either…there are plenty of honest, hardworking mortgage brokers out there with families to feed just like yours. Local mortgage brokers are almost always better… local, self-employed mortgage brokers don’t have the costly overhead that comes with a nationwide company. You can get started by checking out the mortgage brokers in the phone book. Tell them that you understand how Yield Spread Premium works and simply will not accept any mortgage loan that includes this markup. Offer to pay a flat origination fee of one percent and you’ll be well on your way to getting a wholesale mortgage rate for your next home mortgage loan.
You can learn more about Yield Spread Premium and how it drives up your mortgage payment unnecessarily by checking out my free underground mortgage refinancing videos.
Here’s a sample of what you get for free today… this module explains why 95% of your neighbors overpay for their home loans.
If I compare the loan offers just based on APR for all offers that have the same length (i.e. 30 years), does that not cut thru all of the fees and points?
Unfortunately it's not that simple. The APR is based on the fees found in the "Good Faith Estimate" which as the name implies is just an estimate given in "Good Faith." Mortgage lenders routinely low-ball the fees found in the Good Faith Estimate to make their loan offers more attractive; this makes the APR all but worthless for mortgage shopping…
Nice and needed post. I see day after day that financial and economic knowledge is missing in our schools. Sometimes it's shocking, how little people know about mortgages, even when they are personally involved! Especially how interest rate works and how it can change. And then we see surprised people, whose mortgage expenses jumped into heavens within few months, not knowing what to do…
This is why you should deal directly with a lender and cut out the middle man(broker).