If you’re in the market for a new home loan you’re probably searching the Internet for Best Mortgage Refinance Rates. There are a couple things you might not know about the rate quotes you find on the Internet that could hurt you when refinancing.
Did you know that 98% of all mortgage quotes you find online have someone’s commission built into them? These quotes could wind up costing you thousands of dollars unnecessarily without you even knowing it. Here are several tips to help you avoid these hidden mortgage rate commissions and get the best mortgage refinance rates for your next home loan.
Best Mortgage Refinance Rates
What are the best mortgage rates when refinancing your home loan? Could you spot a par mortgage rate if you found one? Do you know what a par mortgage rate is? Here’s the simple definition of a par mortgage rate: it’s one that does not cost money for you or create money for the person arranging your loan. That’s the secret your mortgage broker doesn’t what you to know about.
What do I mean by a mortgage rate that doesn’t costs money to get? That’s easy, you’ve heard of discount points right? Discount points are a fee you have to pay at closing to get a specific mortgage rate. One point is usually one percent of your loan amount. A par mortgage rate does not require that you pay any discount points to qualify…that’s a good thing. What about creating money? That’s the hidden commission you’ve probably not heard of. Did you know that your mortgage broker earns a commission from the lender for marking up your mortgage rate? This hidden commission could easily result in your overpaying thousands of dollars every single year you keep your loan.
Hidden Mortgage Broker Commissions
Your mortgage broker is compensated for their work in two ways. The broker can charge you a fee known as a loan origination fee. This fee is usually disclosed up front and can be found on your Good Faith Estimate. A reasonable amount to pay for loan origination is one point, or 1% of your mortgage amount; however, many greedy brokers charge as much as 3-5% of your loan amount. You should never agree to pay this much for a broker’s services…in fact, if you follow the RefiAdvisor system outlined in my Underground Mortgage Videos you can easily find a mortgage broker willing to work for a one percent origination fee.
So what about this hidden commission? It’s called Yield Spread Premium and is single handedly responsible for American homeowners overpaying sixteen billion dollars this year alone according to the US Department of Housing and Urban Development.
What Is Yield Spread Premium?
Yield Spread Premium is a hidden commission created for your mortgage broker when they lock and close your new mortgage loan with a higher than necessary mortgage rate. Higher than necessary means they mark up the mortgage rate your lender approved you to get a commission from that lender…it’s really that simple. Most mortgage brokers will not talk about Yield Spread Premium and leave it off the Good Faith Estimate completely. Many mortgage brokers become defensive, even angry when you question them about Yield Spread Premium, and why wouldn’t they…
This hidden commission often doubles, even triples their compensation for arranging your home loan. You might be asking yourself why Yield Spread Premium is a problem…the fee isn’t coming out of your pocket, the lender pays it right? While it’s true that the lender is paying Yield Spread Premium, you need to consider why the lender is paying your broker to mark up your mortgage rate.
Banks and mortgage lenders make the majority of their profits selling their loans to investors. That’s right, banks are part of the problem here too…you cannot avoid Yield Spread Premium simply by refinancing your home loan with a bank to cut out the mortgage broker. Banks are just as guilty of ripping people off as the dirtiest mortgage broker out there; however, due to a little known loophole in the Real Estate Settlement Procedures Act it’s perfectly legal for your bank to rip you off AND they don’t even have to disclose what they’re doing. Perfectly legal and perfectly sleazy…if you refinance your home mortgage with a bank or credit union you will overpay…guaranteed.
So how do you get the best mortgage refinance rates? You simply have to find the right mortgage broker willing to work for a one percent origination fee without taking Yield Spread Premium on the loan. This isn’t as difficult as you might think and you don’t have to be a financial guru to pull it off. In fact, if you have one hour to invest with the underground mortgage videos on this website, you’ll learn everything you need to know and have the tools you need to pull it off in one place.
Still Not Convinced?
Once you find the right mortgage broker you’ll have access to Par Mortgage Refinance Rates and will save thousands of dollars every year that you keep the loan. Still not convinced? Here’s an example to illustrate how this hidden commission known as Yield Spread Premium drives up your mortgage payment unnecessarily. Suppose for example you are refinancing your California mortgage loan for $350,000. Your mortgage broker quotes you a rate of 5.75% and charges an origination fee of two points. Remember, one point is one percent of your loan amount…in this example the origination fee is two percent, or $7,000.
Two percent is double what you could have paid had you signed up for my underground mortgage videos, but not registering today won’t be the first mistake you make on this loan. Take a look at that mortgage rate your broker quoted you…what you don’t know is that the lender actually approved you for a mortgage rate of 5.25% but the broker marked it up to 5.75% to get a commission from the lender. In this example the lender pays a commission of 2 points, or an additional $7,000 to the broker for marking up your mortgage rate, doubling the mortgage broker’s commission on your loan.
What does the lender get for their money? You agree to a loan that is .50% higher than it needed to be…big deal, half a percent isn’t that much right? Let’s take a look at what .5% does to your mortgage payment. Your monthly payment on a 30 year, fixed rate mortgage at 5.75% would be about $2,053 per month. If you had only watched my Underground Mortgage Videos and got the mortgage rate you deserve at 5.25% your mortgage payment would only be $1,930…that’s a difference of $1,476 you’re throwing away every year!
If only you’d have registered for my Underground Mortgage Videos you’d have saved yourself $7,380 after five years…
You can learn more about finding the best mortgage refinance rates that don’t have this hidden commission known as Yield Spread Premium or lender junk fees by registering for my Underground Mortgage Videos available on this website.