People frequently find the site by typing the words “Best Refinance Home Mortgage Loan Rate” into a search engine. They’re probably searching for a rate quote; however, how many homeowners actually know what they’re looking at when they get one?
Best Refinance Home Mortgage Loan Rate will get you a mortgage with Yield Spread Premium.
Most homeowners don’t know the rate quotes they receive are actually retail interest rates. They’ve been approved for a wholesale rate but their loan originator marks that rate up to get a commission from the lender. The difference between the wholesale rate you’re approved and the above market interest rate you close is called Yield Spread Premium.
Loan originators mark up mortgage rates because they can double, even triple their commission by adding Yield Spread Premium. Most mortgage brokers and loan representatives will never tell you they’re doing this; if you don’t catch the cleverly disguised markup on your HUD-1 statement you’ll never know what your could have been. Here’s an example to illustrate how the “best refinance home mortgage loan rate” quotes can hurt you.
Suppose you’ve decided to refinance your existing $250,000 mortgage loan for 30 years at 6.75 percent. Your mortgage company charges you a one percent fee for the loan origination. One percent is a perfectly reasonable fee for a mortgage broker’s services; however, most brokers will tell you otherwise. What your mortgage broker isn’t telling you about this transaction is that you qualified for a 6.0% and they’ve marked up your rate to 6.75% for their commission. The wholesale lender pays your broker a bonus of 1.0% for every .25% you agree to overpay. In this example the broker receives a whopping $10,000 commission for overcharging you.
If you’ve ever wondered how your mortgage broker is making his Hummer payment, now you know. Your broker walks away with a ridiculous commission and you get stuck paying an above market mortgage rate. The good news is that you can stop your loan originator from lining their pockets at your expense. Homeowners who learn to recognize Yield Spread Premium can negotiate with potential mortgage brokers to avoid paying this ridiculous markup. This is much easier than you think and I’ve prepared a simple video to show exactly how to do it. For immediate access to my mortgage refinancing toolkit simply register using the link provided at the top of this page.
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.
