Are you considering a new mortgage loan and are looking online for Mortgage Rates Information? There are several things you need to know about the mortgage rate quotes that you get from a mortgage broker or find on the Internet that can result in overpaying thousands of dollars for your home mortgage.
Here are several tips to help you avoid paying too much when refinancing your home mortgage loan.
Mortgage Rates Information
How do mortgage rates work anyhow? With the exception of bank originated mortgage loans, mortgage rates come from wholesale lenders. These lenders don’t deal with the public directly but offer loans through mortgage brokers and other companies that resell their mortgage loans for a commission. This commission can come from two sources, the first being you and the second being the lender.
Mortgage Origination Fees
When your mortgage company or broker charges you a fee for arranging your loan this is called a loan origination fee and should appear on your Good Faith Estimate and HUD-1 Statement. A reasonable amount to pay for this origination fee is one percent of your loan amount and will be due at closing. Many mortgage brokers overcharge this origination fee and it’s not uncommon to find Good Faith Estimates with 2.5% or more. (That doesn’t mean you should pay it though…)
The second commission you need to be aware of (and this one’s important) is a fee paid by the mortgage lender. Why should you be concerned about a fee paid by the mortgage lender? If the lender’s paying the fee it’s not coming out of your pocket right…or is it?
Why would the mortgage lender pay a fee to the broker for arranging your home loan? I mean, what’s in it for them, really? Mortgage lenders know that home loans with higher than market interest rates bring them a premium profit when the loans are sold on the secondary, or investor mortgage market. Your lender pays your mortgage broker a fee for locking and closing your home loan with a higher than necessary mortgage rate. This means your monthly payment is higher than it should be to give that broker a commission. (At your expense…)
Should the broker get a commission from the lender on top of what you’re already paying them for loan origination? Your broker probably thinks so; however, there are a number of upfront and honest mortgage brokers out there willing to refinance your home for a flat one percent origination fee without slipping in junk fees or marking up your mortgage rate. My Underground Mortgage Videos will show you exactly how to find this person.
What About Bank Mortgage Loans?
You might think that you can avoid mortgage broker markup and commission simply by refinancing with your bank. The problem is that your bank knows the same thing about making a profit from the secondary mortgage market by selling your home loan. There might not be a middleman marking up your mortgage rate to get a commission from the bank; however, the bank still marks up your mortgage rate to boost their profits when selling your loan. Another problem with your bank mortgage is thanks to the Banking Lobby in the United States, banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margins on your loan.
Bottom line if you are considering taking out a mortgage loan from your bank: you’ll never get anything close do a par mortgage rate…
Par Mortgage Rates Definiton: Any interest rate you qualify for without having to pay points up front and does not create an “extra” commission for the person arranging your loan.
How to Get the Best Deal When Refinancing
Getting the best deal on your next home mortgage loan boils down to finding the right person to arrange it for you. There are plenty of honest mortgage brokers willing to work for a one percent origination fee without marking up your mortgage rate or throwing in junk fees. Who is the best mortgage broker to refinance your home loan? It’s probably not the broker working for a large firm with expensive office spaces or a company hummer. These brokers are simply unable or unwilling to negotiate the kind of deal described here when refinancing.
Tell your prospective mortgage brokers that you are willing to pay a one percent origination fee for their services and will not accept any loan that includes Yield Spread Premium. Remember, Yield Spread Premium is the commission paid by your lender when the mortgage broker locks and closes your home loan with a higher than necessary mortgage rate. Avoiding this unnecessary markup of your mortgage rate can save you thousands of dollars every year that you keep the loan.
You can learn more about refinancing your home for a flat one percent origination fee without paying unnecessary markup of your mortgage rate or junk fees at closing by registering for my Underground Mortgage Videos. Register today and you’ll have instant online access to the mortgage videos and materials without downloading anything to your PC.