Are you searching the Internet for Home Mortgage Refinancing Rates?
Mortgage rates are at their lowest levels in history so it’s very easy to find a good rate; however, if you want the lowest mortgage rates possible without overpaying the broker for a loan that doesn’t include junk fees there are a few things you’ll need to know.
Here are several tips to help you avoid overpaying for your next home loan while getting super low home mortgage refinancing rates.
Home Mortgage Refinancing Rates Online
The Internet is an excellent tool for researching mortgage rates; however, there are several precautions you need to take. If you’re looking at one of the big mortgage sites like Lending Tree, always check out their disclosure statement to see how they get paid for their services. Here’s a sample from Lending Tree’s disclosure statement…
Lending Tree does not charge you (the homeowner) any fee for its services. Computerized loan origination fees paid by the Lender may be included in your mortgage rate, points or loan term and will be shown on your settlement statement. (Meaning you’re paying the fee indirectly…still sounds like you’re paying Lending Tree a fee to me, what do you think?)
What’s a computerized loan origination fee anyway? Many of the websites you find on the Internet like Lending Tree do nothing but collect information and sell it to mortgage companies and brokers for a fee. The broker or lender turns around and passes the fee on to you in the form of a Computerized Loan Origination Fee which will appear on your Good Faith Estimate and HUD-1 Settlement Statement. Do you need to pay this fee to the Lending Trees of the world for selling your information? Absolutely not…
What about your mortgage rate? According to Lending Tree, the fee that they receive can also be included in your mortgage rate. The markup of your mortgage rate for a fee is known as Yield Spread Premium and you should know that the Secretary of Housing and Urban Development recently said this markup will cost American homeowners sixteen billion dollars this year alone…
Lending Tree’s claims of not charging a fee for their services simply aren’t true. The fee still comes out of your pocket; it’s just not paid to lending tree directly… When you pay this the form of a higher mortgage rate it’s the fee that keeps costing you all year long.
Lending Tree isn’t the only one out there that marks up your mortgage rate for fun and profit; in fact, most mortgage brokers routinely include Yield Spread Premium in their loans without fully explaining what they’re doing. Many mortgage brokers will tell you not to worry about this fee because it’s not coming out of your pocket; however, it’s not the fact that your lender is paying the broker a fee, but why they’re paying this fee that should concern you.
Yield Spread Premium: What You Need to Know
In the simplest definition Yield Spread Premium is a percentage of your loan amount (cash) created for the mortgage broker when they lock and close your home loan with an above market mortgage rate. This markup of your mortgage rate leads to a higher monthly payment and more cash out of your pocket. In fact, the mortgage broker is paid one percent of your loan amount for every .25 percent they markup your rate. The markup of .25 percent doesn’t sound like much but it can add a hundred dollars or more to your payment, adding up to thousand dollars or more per year.
There is good news since you’re reading this today… Yield Spread Premium can be avoided. It is possible to find a mortgage broker willing to arrange your home loan for a one percent origination fee without marking up your mortgage rate for a commission. You just need to know how to negotiate the deal. My Underground Mortgage Videos show you how to do just this while avoiding lender junk fees. You’ll also learn what you can do to give your credit a tune-up prior to applying.
Bank Mortgage Loans & Service Release Premium
Some homeowners think they can avoid mortgage broker’s fees and markup by refinancing their mortgage loan with a bank or credit union. The bad news is the bank charges the same markup on your mortgage rate as the broker; it just has a different name. Banks markup their mortgage rates to make a profit when your loan is sold to investors on the secondary market… loans with higher than market rates bring the bank premium profits.
When the bank marks up your mortgage rate to make this profit the markup is called Service Release Premium. The bank is not required to disclose this markup to you because they are exempt from the Real Estate Settlement Procedures Act which requires mortgage brokers to disclose the Yield Spread Premium the receive from the lender. Because banks don’t have to disclose their markup or profit margin on your mortgage you’ll never get as good a deal from your bank as you could refinancing your mortgage with an honest mortgage broker.
You can learn more about getting the best possible Home Mortgage Refinancing Rates without lender junk fees by registering for my Underground Mortgage Videos. Register today and you’ll have immediate access to the mortgage videos and a list of mortgage brokers in your area that do not mark up rates for a commission in my password protected member’s area, without downloading anything to your PC or Macintosh.