If you’re considering refinancing your home loan with a mortgage broker there are several things you need to know in order to avoid paying too much. Mortgage brokers can be an excellent resource for finding loan offers you wouldn’t have access to on your own; however, unless you know how to negotiate with mortgage brokers you’ll be refinancing with a mortgage rate that includes commission based markup and unnecessary junk fees.
Here are several tips to help you find the right mortgage broker allowing you to refinance with wholesale mortgage rates while avoiding garbage fees.
What Are Retail Mortgage Rates
The biggest mortgage broker secret today is also the sleaziest. Mortgage brokers take wholesale rates and markup them up to get a commission from the lenders. They do this even though you’re paying them an origination fee for finding you a loan…lining their pockets at your expense. Here’s an example how this commission based markup works.
Suppose you’re refinancing a $250,000 mortgage loan for 30 years at 6.75%. Your mortgage broker charges you an origination fee of 1.25% which means you’ll have to pay $3,125 at closing for your broker’s services. What your mortgage broker isn’t telling you is that you actually qualified for a 6.0% mortgage rate from the lender that approved your application and they’ve secretly marked your rate up to 6.75%. Most mortgage brokers never admit that they’re doing this with your interest rate and if you were to question the markup they would try and explain it away.
Many mortgage brokers go so far as to fabricate rate lock confirmation from the lender to hide what they’re doing with your mortgage rate. If you were to see the actual rate lock from the lender this markup of your interest rate is clearly disclosed. The final opportunity you have to catch your mortgage broker’s dirty little secret is on the HUD-1 statement. The fee your broker receives for overcharging you is disclosed around lines 810-811 of this document; you will often see it called mortgage broker rebate, YSP paid to mortgage broker or Yield Spread Premium.
In the previous example he mortgage broker receives 1% of your loan amount for every quarter percent that they secretly overcharge you. This mortgage broker walked away with $7,500 on top of the $3,125 you’re already paying for their services. That’s $10,625 for a few hours of dishonest work. Don’t be a victim of these mortgage broker secrets…by doing your homework you can avoid this unnecessary markup of your mortgage interest rate and garbage fees like loan processing fees and rate lock fees to name just to name a couple.
You can learn more about refinancing your mortgage with a wholesale rate by registering for a free mortgage video tutorial. The videos will show you not only how to avoid paying too much with unnecessary junk fees and markup of your mortgage interest rate, but how to tune up your credit score before you apply for a new mortgage and get the lowest possible interest rate. Register today while this is still a free offer.