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.

FHA Secure Frequently Asked Questions (FAQ)

fha loans FHA Secure Frequently Asked Questions (FAQ)I have been answering a number of questions regarding President Bush’s expansion of the FHA loan program with FHA Secure. I’ve decided to consolidate these questions into an FHA Frequently Asked Questions (FAQ) that will be updated frequently as the program develops.

Who is FHASecure Intended to Help?

There are currently just over two million American homeowners with Adjustable Rate Mortgages scheduled to reset over the next four years. The Federal Housing Administration estimates that that this program could help 240,000 homeowners refinance their mortgage loans. If your mortgage is scheduled to reset and you will no longer be able to afford the payments, FHASecure could help you refinance with a government insured, conventional mortgage loan.

How soon can I apply for FHASecure mortgage refinancing?

The Federal Housing Administration began accepting applications on September 5th, 2007 and the program will run through December 31st of 2008.

Do my payments have to be current before I apply?

In order to qualify for FHASecure mortgage refinancing you must pay your mortgage payments on time for six months prior to your Adjustable Rate Mortgage’s scheduled rest. This is not the only requirement, you must be employed and have sufficient income and work history to qualify. FHASecure will charge you a mortgage insurance premium amount based on your credit rating once you’re approved.

What are the requirements for FHASecure mortgage refinancing?

The basic requirements are that you have a non FHA mortgage that has already reset or is scheduled to be reset. You must show that prior to the reset you were making your mortgage payments on time for at least six-months prior to your loan’s reset. There are provisions for homeowners who have missed payments or have poor credit if they have built up enough equity in their homes to qualify. “Reset” means that your lender will be adjusting your mortgage rate and raising your mortgage payment.

Can interest-only and option Adjustable Rate Mortgages be refinanced under FHASecure?

Yes, any Adjustable Rate Mortgage as long as it is not an FHA insured loan can be refinanced with FHASecure. Fixed rate mortgages are currently not eligible for the program but could be added at a later date.

If I’m not behind on my payments can I still refinance with FHASecure?

FHASecure is intended for homeowners that are behind on their mortgage payments because of a scheduled interest rate adjustment on their loans. If you’re not behind on your mortgage payment you could still benefit from a standard FHA mortgage which could get you a lower mortgage interest rate.

What is the maximum I can borrow with an FHASecure loan?

The amount borrowed cannot exceed the conforming loan limits set by Fannie Mae. In 2007 this amount is $417,000.

Can I take out an interest only or option Adjustable Rate Mortgage with an FHASecure Loan?

No. The FHA will not insure interest only or payment option Adjustable Rate Mortgages..and they probably never will due to the risks associated with these Adjsutable Rate Mortgages.

What are FHASecure Mortgage Insurance premiums?

When you take out an FHASecure mortgage loan you will be charged a monthly mortgage insurance premium. This mortgage insurance reduces the risk for the Federal Housing Administration allowing the agency to cover homeowners with poor credit. The amount you pay for your mortgage insurance premium depends on your credit. Homeowners with poor credit will pay more than homeowners with good credit.

If you would like to read more refinancing advice, please register for our free mortgage refinancing blueprint.