How would you like to slash $1200 a year from your home loan payments on your next mortgage refi? What if a little known mortgage refi strategy could keep $100 or more in your pocket every month? Here are several of my best mortgage refi tips to help you avoid unnecessary markup and junk fees on your next home loan.
Wholesale Mortgage Refi Secret
Most brokers will tell you that you can’t get wholesale mortgage rates because they’re protecting a hidden commission they pocket for marking up your interest rate. Truth be told, you can get a wholesale interest rate once you find the right person to arrange your home loan. What are wholesale mortgage rates? Simply put, wholesale interest rates do not include markup intended to create a commission for the person arranging your home loan and you won’t be required to pay discount points just to qualify.
What about this hidden markup of your home loan interest rate? Your broker knows the interest rate your lender approved you for; however, for every quarter point they mark up this mortgage refi interest rate the lender kicks them back one percent of your home loan amount. This kickback is a cash commission known as Yield Spread Premium or overage and is basically an incentive for your broker to overcharge you.
Overage & Your Home Loan Payments
What does mortgage refi overage do to your home loan payments? Here’s an example to illustrate why you need to avoid this unnecessary markup on your next home loan. Suppose your mortgage refi is for $275,000 and the broker quotes you an interest rate of 5.75%, charging you an origination fee of 1.5%. In this case the origination fee alone will cost you $4,125 at closing, but what about your payments? In this case your monthly payment on a thirty-year, fixed-rate home loan would be $1,605. Not bad you say…that’s less than I’m paying now.
The problem with this mortgage refi is what the broker isn’t telling you. Aside from overcharging the origination fee, (a reasonable amount to pay the broker is 1%) what the broker isn’t telling you is that you actually qualified for a 5% interest rate and they’ve marked it up for Yield Spread Premium or overage from the lender. In this example the broker pockets $8,250 from the lender for overcharging you on top of the $4,125 you’re already overpaying for loan origination. What about your home loan payments? If you had the home loan you deserve at 5% your monthly payment would only be $1,476. That’s a difference of $1,548 of your cash lost down the drain every year because the wrong broker took advantage of you.
Avoid Hidden Markup & Save
You don’t have to fall for the same pitfalls your neighbors did on your mortgage refi. It is possible to refinance with a wholesale rate, pay the broker a flat one percent for loan origination while avoiding junk fees…you just have to find the right person to arrange your next mortgage refi. This isn’t as hard as you think…you don’t have to be a personal finance guru or have a cousin in the business.
You can learn more about getting a wholesale interest rate on your next mortgage refi by checking out my free Underground Mortgage Videos.
Here’s a quick sample to get you started with more about avoiding that sneaky mortgage refi overage that drives up your payments unnecessarily…
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.
