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The Truth About Home Refinance Rates

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If you’re a new homeowner thinking about refinancing, or even a seasoned real estate investor looking to improve your bottom line, there are several things you need to know about home refinance rates. Many people compare mortgage loans to retail products like kitchen appliances or televisions. While it’s true that mortgage loans are basically retail in nature, if you take this mindset when comparing home refinance rates you’re going to overpay like 95% of your neighbors. Here are several of my best mortgage refinancing tips and the ugly truth about home refinance rates.

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Best Home Refinance Rates

What’s a good mortgage rate when you’re refinancing your home loan? At the time, it’s the lowest home refinance rate you can get without paying unnecessary fees. Which fees are unnecessary? That’s the problem isn’t it? There is no roadmap (until now) to help you shop for a mortgage without paying unnecessary markup of junk fees. This is after all what makes mortgage loans “retail.”

For consumers retail products are the goods and services you purchase every day. These products and often services have all been marked up to make a profit. Someone purchased these goods and services at a much lower price and sells them to you at a much higher price. The same is true of home refinance rates. Mortgage companies and brokers offer home refinance rates from wholesale lenders that have been marked up to create them a profit. The rate you get, which also determines how much your monthly payment has been marked up to create a commission for the person arranging your home loan.

Hold the phones… aren’t you already paying this person a perfectly reasonable loan origination fee for their work on your mortgage loan? Not only are you paying (possibly even overpaying) this fee, many mortgage companies and brokers in a sneaky, behind the back fashion are marking up your home refinance rates to double, even triple their commission on your home loan. This markup of your home refinance rates drives up your mortgage payment unnecessarily, which during tough economic times like todays, should be a capital offense.

You might be reading this article today thinking there’s a simple solution to all this home refinance rates nonsense, I’ll just refinance with my bank. Banks are direct lenders and cut out the middleman right? The problem with your reasoning is that banks are greedy and like other so-called direct mortgage lenders do not offer their customers wholesale home refinance rates. Banks and other direct lenders fund their home loans with their own money making them exempt from the current Real Estate Settlement Procedures Act (RESPA). You see, in the 90s the Banking Lobby paid off your Congressional Representatives to have the laws changed to exclude banks and when this happened all of the direct lenders jumped onboard. (It’s not called bribery when it’s legal…it’s called lobbying)

Because of this loophole in RESPA legislation your bank and all of the other direct lenders out there aren’t required to disclose their markup or profit margin on your home refinance rates. While they don’t receive a fee directly by marking up your mortgage rates like mortgage brokers, these lenders profit when your home loan is sold to investors on the secondary market. Banks and direct lenders know that home loans with higher than market mortgage rates bring them a tidy profit when your loan is sold, therefore the mortgage rates they offer their customers are always higher than wholesale.

How to Get Wholesale Home Refinance Rates

So how do you sort through all the crap, junk fees, and mortgage broker B.S. to get wholesale home refinance rates? You don’t have to be a financial guru to pull it off; you just need to find the right person to arrange your next home loan. We’ve already discussed why you won’t find this person working for a bank or direct mortgage lender; you need to find the right sort of mortgage broker willing to work for a flat origination fee without marking up your mortgage rate. It is possible to refinance your home with a wholesale mortgage rate paying only a flat origination fee of one percent and I’ll show you how to do it, without charging you a penny.

You can learn more about getting wholesale home refinance rates without paying unnecessary fees by checking out my free Underground Mortgage Videos.

Here’s a sample of you’ll get… this module explores the unnecessary markup of home refinance rates that is responsible for nearly all of your neighbors overpaying for their home loans.

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{ 1 comment… read it below or add one }

Gabe | freebloghelp. January 14, 2010 at 2:07 am

Great points about refi! One thing many people don't know about are conversions.

I was actually very fortunate in my situation. I had a 5/1 ARM with the option to convert at any time. I had a jumbo loan rate of 5.25% in 2007, which was pretty good. By early 2009, about 18 months into the loan, I converted the mortgage to a 30 year fixed at 5%. I still had to pay a nominal fee (about $1000?) but it was well worth it!

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