If you are considering refinancing your mortgage and want the best Florida mortgage rates, there are several things you need to know about the rate quotes you receive.
The quotes you receive over the Internet and from your mortgage broker all include commission based markup that could result in your overpaying thousands of dollars every year.
Here are the basics you need to know about Florida mortgage refinancing to help you avoid paying too much for your next mortgage loan.
Beware Commission Based Markup
The commission based markup of your mortgage rate is called Yield Spread Premium. What is this markup? Yield Spread Premium is simply a percentage of your loan amount created when the mortgage broker or Internet mortgage company locks and closes your loan with above market interest rates. This is paid on top of any origination fees you’re already paying for that person arranging your loan.
Here’s an example of how Yield Spread Premium works. Suppose you are refinancing your Florida home mortgage for $350,000 and the broker tells you that you qualified for 6.5%. The broker charges you a one percent origination fee for arranging the loan; however, what you don’t know is that you were approved to a 6.0% mortgage rate and the broker marked it up to get a 2% kickback from the lender. In this example you pay the broker $3,500 for the origination fee and the lender pays them $7,000 more for overcharging you.
What Does Yield Spread Premium Do To Your Payment?
In the previous Florida Mortgage Refinancing example with a 30 year fixed rate mortgage your payment at 6.5% would be about $2,212. If you got the interest rate that you actually qualified for at 6.0% your payment would be only $2098. This is $1,368 you’re throwing away every year because the broker lied to you about your interest rate!
The good news for you and your home loan is that you can avoid this unnecessary markup of your mortgage interest rate and keep more of your money out of the broker’s pockets. You can qualify for a wholesale Florida mortgage rate and only pay a one percent origination fee to the person arranging your loan. You can learn more about Florida mortgage refinancing without paying commission based markup or junk fees by checking out my free Underground Mortgage Videos.
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.
