If you are looking for a mortgage company for your South Carolina home loan there are several things you should know about rate quotes before choosing one. The rate quotes you receive on the Internet and from your South Carolina mortgage companies all include commission based markup that could result in overpaying thousands of dollars every year you keep the loan. Here are the basics you need to know about mortgage rates before choosing a mortgage company in South Carolina to purchase or refinance your home.
The commission based markup of your mortgage rate is the industries dirty little secret. Your mortgage company tells you that you qualified for a specific interest rate when you actually were approved for a much lower rate. South Carolina mortgage companies do this because the lender behind the loan pays them a commission for overcharging you. This commission is called Yield Spread Premium and according to the Secretary of Housing and Urban Development is responsible for homeowners in the United States overpaying sixteen billion dollars every year.
How Yield Spread Premium Works
Suppose you purchased your South Carolina home for $350,000 and qualified for a 7% mortgage rate. You used a traditional fixed rate mortgage to purchase your home with a 30 year term length and your payments have been $2,328 but what you don’t know is that you actually qualified for a 6.25% interest rate and the mortgage company marked it up to get a bonus from the lender. Your mortgage company charged you a fee from originating your loan and then took a kickback from the lender of 3% of your loan amount for overcharging you.
If you had purchased your home at 6.25% instead of 7% your mortgage payment would have been only $2,155. The first year you had your home you threw away $2,076 because your South Carolina mortgage company lied to you about your rate. After just five years you’ve thrown away $10,380! Can you see why choosing a mortgage company that does not include Yield Spread Premium with your loan is the most important aspect of the new mortgage?
Yield Spread Premium Can Be Avoided
When you avoid this unnecessary markup of your mortgage interest rate you have the ability to refinance with wholesale mortgage rates. Doing this for yourself is easier than you think…you just need to find the right mortgage company or broker for the job. You can refinance your South Carolina mortgage with a wholesale mortgage rate and only pay a one percent fee to your mortgage company or broker if you know how to go about this. To learn more about finding the right South Carolina mortgage company and avoiding junk fees, register for my free video tutorial.
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.
