Are you considering refinancing your home loan and are searching the Internet for the best refinance mortgage?
If so, there are several things you should know about the mortgage rate quotes you find online, even those from your local mortgage broker.
Here are several tips to help you find the Best Refinance Mortgage while avoiding paying too much in interest rate markup and mortgage junk fees.
Finding the Best Refinance Mortgage Online
Did you know that 99% of the mortgage quotes you get today have been marked up to give someone a commission? This is a commission you’ll pay in addition to the loan origination fee. Does it make sense to pay double for your mortgage loan? The problem accepting a mortgage rate quote that includes markup for a commission is that you’ll keep paying the mortgage broker’s fee over and over again every year for as long as you keep the loan. Doesn’t it make more sense to pay a flat mortgage origination fee of one percent and get the broker out of your life for good?
Mortgage Broker Markup
So what is this nefarious markup of your mortgage interest rate that costs the average homeowner $1,200 per year? Simply put, mortgage brokers get a kickback from lenders for locking and closing your home loan with higher than market rates. What are market mortgage rates? Also known as “par” mortgage rates, this is one that does not cost you discount points to get and does not create a kickback for your broker. Here’s how it works. Your mortgage broker quotes you an interest rate based on how much they think you’ll agree to overpay. The broker knows what mortgage rate you were approved for; however, for every .25% they overcharge you the lender pays the broker one percent of your loan amount in addition to the origination fee you’re probably overpaying for the broker’s services.
How to Avoid Yield Spread Premium
This kickback paid the lender for the mortgage broker overcharging you is called Yield Spread Premium. Most homeowners have never heard of Yield Spread Premium and the abuse is so rampant that the Secretary of Housing and Urban Development recently stated American homeowners will overpay sixteen billion dollars this year alone because of it.
Fortunately Yield Spread Premium can be avoided. There are a handful of honest mortgage brokers out there willing to help you find the best refinance mortgage available without overcharging you in the process. A reasonable fee to pay for your loan origination is a flat one percent; you just need to find the right person to arrange your loan.
Banks Will Not Give You Par Mortgage Rates
Many homeowners think they can avoid markup and mortgage junk fees by refinancing with their bank or credit union. The problem is while its true banks don’t have the same markup as your mortgage broker on their loans they still markup interest rates to make a premium profit when your loan is sold. Also, due to a loophole in the Real Estate Settlement Procedures Act your bank isn’t required to tell you that they’ve marked up your rate or disclose their profit margin on your loan. Banks simply don’t offer their customers par mortgage rates…if you want best mortgage refinance possible you’ll have to use a mortgage broker to arrange your loan.
How to get the Best Refinance Mortgage
You can refinance your home loan by paying a flat one percent origination fee without junk fees or a mortgage that includes Yield Spread Premium; you just need to find the right mortgage broker for the job. Don’t get me wrong, not all mortgage brokers are dirty and rip off their customers; however, they have earned the reputation they deserve which is why you need to take steps to keep your broker honest when mortgage refinancing.
How to Keep Your Mortgage Broker Honest
You can keep your mortgage broker honest by reviewing key pieces of documentation before signing your loan contract. Don’t worry about making a mistake during the process; your three day recission rights allow you to back out of the deal up to three business days after signing before your mortgage loan is funded. Here are the documents you need to focus your attention on to get the best refinance mortgage possible.
First, make sure your loan does not create Yield Spread Premium for the mortgage broker. Tell your broker that you will pay a reasonable amount for the origination fee but will not accept a mortgage that creates Yield Spread Premium. Once you find a mortgage broker willing to arrange your loan with these terms you will need to pay close attention to the following two loan documents. First, once you lock in your mortgage rate you will need written confirmation of your lock from the lender. The lender’s written rate lock confirmation will clearly disclose any Yield Spread Premium being paid to your mortgage broker.
Make sure the written rate lock confirmation provided by your mortgage broker comes from the lender and is not something your mortgage broker typed up for you. Many brokers do this to conceal the Yield Spread Premium they are taking on your mortgage. Also, never accept verbal confirmation of your mortgage rate lock. If you don’t have your lock in writing from the lender then you haven’t locked. Period.
The second document you need to focus your attention on to get the best refinance mortgage is the HUD-1 settlement statement. This document will disclose all fees, including mortgage junk fees and Yield Spread Premium. Outlining all of the fees and markup you need to look out for is beyond the scope of this article and is covered in detail in my Underground Mortgage Videos.
You can learn more about finding the best refinance mortgage without paying junk fees or markup of your interest rate by checking out my Underground Mortgage Videos. Here’s a sample of what you’ll get when you sign up today. This module is called “Your Mortgage Lender’s Dirty Little Secret…”
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