Are you searching the internet for a new Refinance Mortgage Interest Rate and want the best deal for your next home loan? There are several things you need to know about the ways your mortgage broker receives compensation for the work they do on your home loan to avoid paying too much. Here are some of my best tips to help you find the lowest Refinance Mortgage Interest Rate without paying unnecessary fees and markup.
Refinance Mortgage Interest Rate Markup
Did you know the person arranging your home loan can receive a commission for marking up your Refinance Mortgage Interest Rate? This commission based markup is paid in addition to the loan origination fees you’re already paying the broker. Many brokers will tell you not to worry about lender paid compensation because the fee isn’t coming out of your pocket; however, what the broker isn’t telling you is what this unnecessary fee does to your mortgage payment.
Yield Spread Premium Is Unwanted Markup
The commission paid by lenders for marking up your interest rate is called Yield Spread Premium. For every .25 percent you agree to overpay on your Refinance Mortgage Interest Rate the person arranging your home loan receives a commission paid by your lender of one percent on top of the origination fees you’re already paying. Mortgage lenders reward brokers for overcharging homeowners such as yourself because home loans with a higher than necessary Refinance Mortgage Interest Rate bring them a premium profit when your home loan is sold to investors on the secondary market.
Mortgage Rate Markup And Your Payment
How does agreeing to a higher than necessary Refinance Mortgage Interest Rate affect your monthly payment? Suppose for example you were refinancing your home for $275,000 and the broker quotes you a Refinance Mortgage Interest Rate of 6.5% charging you a loan origination fee of 1.5%. The loan origination fee alone will cost you $4,125 at closing. A reasonable amount to pay for loan origination is a flat one percent; however, the problem with this offer is what your broker isn’t telling you. What your broker isn’t telling you that you actually qualified for a 6.0% mortgage rate and they’ve marked it up to 6.5% to collect a fee of $8,250 from the lender at your expense.
How is this fee paid at your expense? Consider what this unnecessary markup of your mortgage rate does to your monthly payment. If you agree to the Refinance Mortgage Interest Rate at 6.5% your payment on a 30 year fixed rate loan will be $1,740 per month. If you had the home loan that you should have gotten at 6.0% your monthly payment would only be $1,648 per month. That’s a difference of $1,104 per year out of your pocket for no good reason. How can you avoid this unnecessary markup and put $1,100 per year back in your pocket? Check out my free underground mortgage videos and you’ll discover how to avoid this unnecessary markup and lender junk fees that are the sole reason 95% of your neighbors are paying too much for their home loans.
You can learn more about finding the lowest interest rate without paying junk fees with my free Underground Mortgage Videos.
Here’s a short video that exposes your lender’s dirty secret and shows why your most of your neighbors are overpaying for their home loans.