If you’re searching the Internet for the best mortgage deals to purchase your home or refinance your existing mortgage loan there are several things you need to know about internet mortgage quotes. Unless you know how to find wholesale mortgage rates ALL of the mortgage quotes you find on the online include markup intended to create an unnecessary commission for someone. I say “unnecessary” because you’re already paying the person arranging your home loan an origination fee for their work; any commission they take from the lender comes at your expense in the form of a higher monthly payment. Here are several tips to help you find the best mortgage deals when shopping for a new home loan or refinancing your existing mortgage loan.
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that can save you thousands of dollars on your next home loan.
How to Find the Best Mortgage Deals
Shopping for the best mortgage deals isn’t like you think it should be. Collecting mortgage quotes from dozens of Internet mortgage sites will only get you a list of the worst mortgage offers available. How do you get the best mortgage deals for your next home loan? Start by finding the right person to arrange your mortgage loan. That’s right, you’re not shopping for a loan offer; you’re shopping for the right mortgage broker to get you the best mortgage deals…one that won’t steal your shirt in the process.
Why shop for a person instead of a home loan? The reason has to do with the way mortgage lenders reward loan originators for marking up mortgage rates on the loans they close. Did you know that mortgage lenders reward mortgage companies and brokers that lock and close home loans with higher than necessary mortgage rates with a commission? This is borderline criminal since the person arranging your home loan works for you…not the lender. You’re paying the loan origination fee so there is no reason your mortgage broker should be taking a kickback from the mortgage lender for ripping you off. That’s right…most mortgage companies and brokers blatantly rip of their customers with this unnecessary markup of your mortgage rate. Things have gotten so bad that the Secretary of Housing and Urban Development recently stated this mortgage rip-off will be responsible for fleecing Americans out of Sixteen Billion Dollars this year alone.
How to Avoid Unnecessary Markup of Your Mortgage Rate
I’ve already told you that shopping for the best mortgage deals means finding an honest, hardworking mortgage broker to arrange your next home loan. You might be reading this thinking: “I can avoid all this mortgage nonsense by refinancing with bank…” Truth be told, banks don’t markup mortgage rates the way other mortgage companies rip off their customers; however, bank mortgage rates are still marked up to create “extra” profit for the bank. Banks don’t fund mortgages like wholesale lenders…your bank funds your home loan with the bank’s money and then turns around and sells the loan to investors on the secondary market for a premium.
This “premium” is called Service Release Premium and is the reason banks don’t offer their customers the best mortgage deals. If you need another reason to stay away from your bank when it comes to your mortgage loan did you know that banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose their profit margins on your home loan or just how much they’ve marked up your mortgage rate. Why would you take out a home loan from a lender that doesn’t have to play by the same rules as other mortgage lenders?
Getting the best mortgage deals means paying a flat origination fee for your next home loan without this hidden markup of your mortgage rate. Mortgage rates that do not include this unnecessary markup are called Par Mortgage Rates. “Par” means you don’t have to pay a premium in the form of discount points to qualify AND does not create this unnecessary commission called Yield Spread Premium for the mortgage broker.
Yield Spread Premium Definition
Yield Spread Premium is the unnecessary commission created when your mortgage broker locks and closes your home loan with a higher than necessary mortgage rate. For every .25% that the mortgage broker overcharges you the mortgage lender pays them one point (1%) of your loan amount. Remember this is paid in addition to the loan origination fees that your mortgage broker is probably already overcharging you. What’s a reasonable amount to pay for the loan origination fee on your home loan? One percent is a perfectly reasonable amount to pay and not a penny more…mortgage brokers have plenty of other ways to inflate their commission at your expense. There are a number of fees you need to keep an eye out for on your HUD-1 Settlement Statement like mortgage lock fees and mortgage broker courier fees. These are mortgage junk fees invented to boost the broker’s commission and avoiding junk fees like these is the subject of my Underground Mortgage Videos.
How to Find an Honest Mortgage Broker
Honest mortgage brokers aren’t hard to find. Start by looking for small, self-employed mortgage brokers and tell them that you understand how Yield Spread Premium works and do not want any home loan that includes this markup. Tell them you are willing to pay a flat one percent loan origination fee for their services. Self-employed mortgage brokers are usually best because they don’t have the overhead and don’t have expensive sales staff pushing their overpriced mortgage loans on unsuspecting homeowners. Oh and that mortgage broker with the company hummer with their face and/or logo splattered all over it…well, you guessed it…they’re ripping people off.
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