Should I Refinance My Mortgage This Year?

If you’re considering a new home loan and are asking the question “Should I Refinance My Mortgage” there are several things you need to know about junk fees and markup. It’s true mortgage rates are at historically low levels and the media is beating their refinancing drum; however, what you’re not hearing about are the ways lenders and loan originators take advantage of homeowners. Here are several tips to help you answer the question “Should I refinance My Mortgage” without losing money in the process.

Should I Refinance My Mortgage Pros & Cons

Like most homeowners you’re probably considering refinancing to save money with a lower payment. It makes sense, lower your interest rate and your monthly payment goes down. The only problem is that it costs money to refinance your home and it’s smart to factor in this expense before answering the question should I refinance my mortgage for yourself. The fees you’ll be required to pay when refinancing include closing costs and origination fees, some of which are legit and some are pure garbage.

Should I Refinance My Mortgage: The Two Percent Rule

If you do any amount of research online when answering the question “Should I Refinance My Mortgage” you’re likely to encounter the two percent rule. Now whoever coined the “Two Percent Rule” was truly a bonehead as this “rule” states that you should never refinance your mortgage unless your new mortgage rate is at least two percent lower than your existing home loan’s rate. If this were good advice practically no one would be refinancing and we wouldn’t be here today. Instead of relying on some bonehead’s epically bad advice it makes more sense to base your answer to the question “Should I Refinance My Mortgage” on a cost/savings basis.

Evaluating your refinancing options like this tells you how long it will take to recoup your expenses and makes it easier to recognize and avoid junk fees. How do figure out how long it will take to recoup your expenses when refinancing? It’s easier than you think. First, figure out what your new monthly payment will be using a basic home mortgage refinance calculator. Subtract your new lower payment from your old payment and you’ve got your monthly savings with the new home loan. Next, total up all of your closing costs including any loan origination fees you’re paying the person arranging your new mortgage. Divide this total by your savings and Voila! you’ve got the number of months it will take you to recoup your expenses from taking out a new mortgage loan.

How to Maximize Your Savings When Refinancing

You can maximize your savings ensuring that it will take the least amount of time to recoup your expenses in two ways. First, get the lowest possible mortgage rate by avoiding your broker’s commission based markup of your mortgage rate. There’s a whole free video series available on this website on how to get the lowest possible mortgage rate when refinancing. Second, keep your loan origination fees as low as possible and weed out all of the unwanted junk fees from your closing costs. It’s not as hard as you think, in fact, following the system in my free Underground Mortgage Refinancing Videos will not only show you how to do all this but save you time in the process. You’ll keeps thousands of dollars of your hard earned cash and look like financial genius to your family and friends.

You can learn more about answering the question “Should I Refinance My Mortgage” by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c

Here’s a quick sample to get you on track to cutting a hundred dollars of fat from your monthly payments. That’s $1200 a year you could be using for other things…

Today’s Mortgage Rates

If you’re like many homeowners you’re tirelessly searching the internet for “Today’s Mortgage Rates” trying to get the best deal when refinancing your home loan. There’s something you probably don’t know about today’s mortgage rates that is the reason most of your neighbors pay too much for their home loans. Here’s what you need to know about today’s mortgage rates to avoid overpaying like your neighbors when refinancing your home mortgage online.

Today’s Mortgage Rates Online

Try searching Google for “Today’s Mortgage Rates” and you’ll find all the usual suspects: BankRate, Wells Fargo, Amerisave and Lending Tree competing for your attention with promises of the lowest rates and fees around. What you might not know about today’s mortgage rates is that all of the mortgage rate quotes you find have been marked up in one way or another to create a profit for someone. Banks do it, mortgage brokers do it, and so do the Lending Trees and other mortgage websites of the world; they all mark up mortgage rates to boost their profits at your expense.

Unwanted Mortgage Rate Markup

Everyone wants the lowest mortgage rate when refinancing their home…the problem is most people don’t understand how mortgage rates work and therefore accept inflated mortgage rates because they just don’t know better. This is why almost all of your neighbors overpay their mortgage lenders month after month, throwing thousands of dollars away unnecessarily. How does this mortgage rate markup work? It depends on the type of lender as to what it’s called but the end result is the same…unnecessarily higher mortgage payments.

If you turn to your bank looking for today’s mortgage rates the banker will swear you’re getting a “good” mortgage rate that hasn’t been marked up for their commission. The banker will even show you the bank’s mortgage rate sheets claiming they’re not paid a commission of any kind. What the banker isn’t telling you and probably isn’t aware is that the bank’s profits come from Service Release Premium. Banks generate Service Release Premium on their home loans when sold to investors on the secondary mortgage market. Home mortgage loans with higher than necessary mortgage loans bring the bank a premium profit so the bank’s mortgage rate sheets have this premium built into them. Your mortgage banker is showing you rate sheets that include Service Release Premium and thanks to a little known loophole in the Real Estate Settlement Procedures Act the bank isn’t required to tell you anything about their markup of your mortgage rate or profit margin on your loan.

Banks aren’t the only ones that markup your mortgage rate for fun and profit…mortgage brokers do it too. When your mortgage rate is marked up by a mortgage broker or company that doesn’t fund home loans with their own cash (in other words the mortgage is funded by a wholesale lender), the profit generated for the person arranging your loan is called Yield Spread Premium.

Yield Spread Premium is a cash percentage of your mortgage loan amount created for the person arranging your home loan when they lock and close your home loan with a higher than necessary mortgage rate. Wholesale lenders reward mortgage brokers and other loan originators with a fee of one percent for every .25 percent that they markup your mortgage rate. This fee is known in the industry as Yield Spread Premium, which just like your bank’s Service Release Premium results in higher than necessary mortgage payments for you.

Most mortgage brokers don’t like to talk about Yield Spread Premium because this unnecessary fee is a significant part of their bottom line and will often double, even triple their commission on your home loan. Let me clarify one thing about Yield Spread Premium…I say this is an “unnecessary fee” for you because you’re already paying this person a perfectly good origination fee for their work refinancing your home loan. Many brokers take this commission from the lender on top of your origination fee without telling you what they’re doing and go to great lengths to hide the markup in your loan documents. Many mortgage brokers become defensive even angry when questioned about Yield Spread Premium; if your mortgage broker does this it is a clear indication that you need to find someone else to arrange your next home loan.

Beware Computerized Origination Fees

Another thing you need to know about today’s mortgage rates on the internet is that many sites like Lending Tree have hidden fees lurking in the fine print. Lending Tree for example offers quotes from their “network” of lenders that pay a fee known as a Computerized Origination Fee to get your information when you fill out that form on Lending Tree’s site. This Computerized Origination Fee is passed on to you the homeowner and is found on your Good Faith Estimate. Should you pay a fee for someone like Lending Tree to sell your information to the highest bidder? Probably not…always check the fine print before applying for a mortgage loan from someone like Lending Tree.

How to Avoid Mortgage Rate Markup and Junk Fees

What’s the best way to refinance your home without a marked up mortgage rate or junk fees? Shopping for today’s mortgage rates doesn’t mean scouring the web trying to find the lowest mortgage rate…that’s what your neighbors did and remember they’re overpaying as you read this. The way to get the lowest possible mortgage rate, which in the business is called a par mortgage rate, is not to find the best mortgage quote but to find the right person to arrange your next home mortgage loan. Find the right mortgage broker to arrange your home loan and you’ll not only get a par mortgage rate but you’ll be able to avoid lender junk fees in the process. What’s a par mortgage rate you ask? Simply put, a par mortgage rate is one that doesn’t cost you anything to get (you don’t pay points) and does not create Yield Spread Premium for the mortgage broker or Service Release Premium for the bank.

I can tell you that banks simply do not offer their customers par mortgage rates so don’t waste your time asking…the mortgage banker probably doesn’t even know what a par mortgage rate is. Mortgage brokers are definitely the way to go when refinancing your home as they have access to wholesale mortgage rates and have the ability to pass these par rates on to their customers…you just have to find the right mortgage broker for the job.

You can learn more about Today’s Mortgage Rates and the finding the right person to arrange your next home loan by checking out my free underground mortgage refinancing videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c

Here’s a sample of what you get with my free mortgage videos today. Sign up today and you’ll get a list of mortgage brokers in your area that offer wholesale rates to get you started on the right path for your next home mortgage loan.

Current Mortgage Rates Falling

home mortgage points Current Mortgage Rates FallingCurrent mortgage rates are declining and are expected to fall further because of the Government takeover of Freddie Mac and Fannie Mae. Mortgage Rates have been rising steadily due to the recent credit crisis in the United States.

Today on FOX News Warren Buffet stated that that the current mortgage rates are based on a phenomenon known as credit spread, and that “spread” is the reason that mortgage rates have been on the rise. The spread is the result of a lack of investor confidence in mortgage backed securities. The debt carried by Fannie Mae and Freddie Mac was headed for a crisis had the Federal Government not stepped in by taking over.

After the Federal Government took over, current mortgage rates are now more like Treasury bonds. These bonds carry very low risk and have low yields and interest rates. When the Government took over Fannie Mae and Freddie Mac mortgage loans became less risky overnight; as a result mortgage rates are declining.

Now is a great time to refinance your higher interest rate mortgage or even consolidate your more expensive home equity line to lock in this lower rate. Despite falling mortgage rates there are a number of reasons that people overpay when refinancing. The least known but most common is Yield Spread Premium. This markup of your mortgage interest rate for a commission by the broker is responsible for American homeowners overpaying nearly sixteen billion dollars this year alone according to the HUD Secretary.

Homeowners who learn how to recognize this markup of their mortgage interest rate are able to take advantage of wholesale mortgage rates and save thousands of dollars ever year. If you’d like to learn more about refinancing your mortgage with a wholesale rate while avoiding lender junk fees sign up for the free video guide available from this website.

30 Year Mortgage Rates

mortgage rates 30 Year Mortgage RatesIf you are in the process of refinancing your home and are searching for information about mortgage rates there are several things you need to know about the rate quotes you receive. Most homeowners don’t realize that 90% of the rate quotes they receive from mortgage brokers and on the Internet include commission based markup included to make someone money from your loan. Understanding mortgage quotes and learning to recognize this markup will help you avoid paying too much for your next mortgage loan.

Today’s 30 Year Fixed Rate

The 30 year fixed mortgage rate has been creeping up slightly to 6.0%. This rate does include Yield Spread Premium which is intended to give a commission to the person arranging your loan. Yield Spread Premium by itself is not necessarily a bad thing; only when it is abused could you wind up paying hundreds of dollars a month unnecessarily.

What is Yield Spread Premium?

Yield Spread Premium is a percentage of your loan amount created when the mortgage company or broker arranging your loan locks and closes with a higher than market interest rate. Suppose your lender approves you for a mortgage rate of 6.0% but the broker closes you at a higher rate of 6.5%. This creates .5% of Yield Spread Premium and brings the broker a commission of 2% of your loan amount. Did your mortgage broker overcharge you? It depends on how your loan was structured and whether or not the broker told you they were marking up your mortgage rate.

Mortgage Broker Compensation

Brokers are compensated in two ways. They can charge you an origination fee for their part in arranging your loan or receive compensation from the lender with Yield Spread Premium. If the broker is charging you an origination fee for their services a reasonable fee to pay is 1-1.5% of your loan amount. Mortgage brokers typically receive one percent of your loan amount for every .25% your loan closes about the interest rate offered by the lender. If this is paid in lieu of an origination fee or used to pay your closing costs Yield Spread Premium can be a good thing; however, it is often abused when the broker charges you an origination fee and pockets Yield Spread Premium without your knowledge.

You can learn more about refinancing your home loan without paying too much in broker fees including ways to recognize and avoid lender junk fees by registering for my free video tutorial.

Lower Mortgage Rates

mortgage broker Lower Mortgage RatesIf you’re in the market for a new mortgage and are searching for lower mortgage rates, there are several things you need to know about the rate quotes you receive. Many homeowners think that comparing offers from several different lenders is all they need to get the best deal; however, what most people don’t understand is that they are simply comparing retail mortgage rates with the same markup. If you really want lower mortgage rates you’ll need to find someone willing to offer you wholesale rates without paying garbage fees. Here are several tips to help you refinance your mortgage with a wholesale mortgage rate and save thousands of dollars in the process.

What Are Wholesale Mortgage Rates?

Wholesale mortgage rates are offered by a certain type of mortgage lender that does not do business with the public directly. These wholesale mortgage lenders offer their best rates to mortgage brokers and other retail mortgage companies that sell loans to the public for a commission. Many people think that by contacting one of these lenders directly they can refinance with a wholesale rate; however, wholesale lenders have retail branches that deal with the public and do not offer wholesale mortgage rates. In order to refinance your loan with a wholesale rate you’ll need to enlist the help of an honest mortgage broker willing to give you access to these rates.

Mortgage Brokers Work For a Commission

The problem with refinancing your home loan with a mortgage broker comes from the way that brokers are compensated. Mortgage brokers are paid for their services in two ways. Most brokers charge you an origination fee for their services. This fee could be one percent or more of your loan amount; however, one percent is a reasonable amount to pay for your mortgage broker’s services. The second method your broker receives compensation is from kickbacks the lender pays for overcharging you with your mortgage interest rate. Many brokers mark up the mortgage rate you qualified because lenders pay a commission of one percent for every .25% they overcharge you. This commission is called Yield Spread Premium and is the reason that most homeowners overpay when refinancing their mortgage loans.

Yield Spread Premium Can Be Avoided When Refinancing

Most brokers get defensive or even angry when questioned about Yield Spread Premium. And why wouldn’t they? This markup of your mortgage interest rate can double, even triple their commission on your loan. You can avoid paying a higher mortgage rate with Yield Spread Premium by finding a mortgage broker willing to work for the origination fee alone, without this kickback from the mortgage lender.

Shop Around For Honest Mortgage Brokers

You can start your search for an honest broker to refinance your mortgage by searching the Internet for an “Upfront Mortgage Broker” in your state. Upfront mortgage brokers charge a flat fee for loan origination without charging Yield Spread Premium on your loan. The Upfront Mortgage Broker’s Association maintains a registry of brokers on their website upfrontmortgagebrokers.org that is categorized by State.

If there are no members in your State you can find the right broker by contacting mortgage brokers found in the phone book. Start by telling these brokers that you understand Yield Spread Premium and will not accept any loan offers that include this markup.

It is usually easier to negotiate this type of deal with a mortgage broker that has their own business as those working for a large brokerage firm may not have the authority to give you the deal you are looking for. You can learn more about finding the right kind of mortgage broker to refinance your home loan without paying Yield Spread Premium and other garbage fees by requesting a free mortgage refinancing DVD.