Common Mortgage Mistakes That Cost You Thousands of Dollars

If you’re searching for the best refinance company for your next home loan and want to avoid common mortgage mistakes you’ve come to the right place. Most homeowners dive into their mortgage refi with a reckless abandon that ends up costing them thousands of dollars in junk fees and unnecessary markup. Here are several of my best tips before you refi to help you avoid making these common mortgage mistakes.

Not Doing Your Homework Before Mortgage Refinancing

A recent survey by one financial blogger I follow indicates that the overwhelming majority of homeowners in the United States lack an understanding of mortgage basics. Terms like loan amortization and yield spread premium tend to draw bank stares masking panic for many homeowners when the topic of how to refinance a mortgage comes up.

The fact is that not learning mortgage basics accounts for homeowners in the United States losing sixteen billion dollars each year according to the Secretary of Housing and Urban Development. RefiAdvisor makes it easy not only to learn the basics but shows you how get the best refinance without paying junk fees or unnecessary markup of your mortgage rates.

Paying for Yield Spread Premium Instead of Loan Origination Fees

Another item on the list of common mortgage mistakes is the loan origination fee. This is the fee paid to the broker arranging your mortgage refi and a reasonable amount to pay for the mortgage origination fee is one percent of your home loan. Many brokers will tell you that you can save yourself a bundle at closing by letting the lender pay this fee for you, which sounds great until you see what it does to your monthly payments.

Why would the lender pay your loan origination fee in the first place? Lenders pay a fee called Yield Spread Premium to the broker arranging your mortgage refi for locking and closing your home loan with a higher than necessary interest rate. Lenders do this because they know that home loans with higher than necessary interest rates bring them premium profits when these loans are sold to investors on the secondary mortgage market.

The problem with this unnecessary markup of your interest rate (one of the most common mortgage mistakes) is that it drives up your payments by as much as $100 a month in many cases for the entire duration of your home loan. That’s as much as $1200 a year that you’ll be overpaying when you could have paid the loan origination fee upfront and walked away with lower payments for the entire duration of your loan.

It’s worth noting that recent changes to the laws regulating mortgage broker compensation changed in 2011 and your broker is now prohibited from charging you both a loan origination fee and taking yield spread premium from the lender. Don’t let a fast talking broker convince you that it’s better to let the lender pay your origination fee just to save a few bucks at closing.

Banks Might Not Be The Best Refinance Company

It’s true that banks are very convenient when it comes to getting your mortgage refi done and Bank of America is touting some very attractive rates at the moment; however, your bank might not be the best choice when it comes to paying unnecessary fees. The reason is that your bank is exempt from the Real Estate Settlement Procedures Act, including all the new changes to the law intended to protect homeowners from predatory lending practices. The Banking Lobby spent millions of dollars in the 1990s lobbying congress for banks to be exempt from this important legislation and was successful.

Bank originated mortgage loans are on my list of common mortgage mistakes for the simple question of why would you choose a lender for something as important as your mortgage refi that doesn’t have to play by the rules?

You can learn more about avoiding common mortgage mistakes like paying for yield spread premium and lender junk fees by checking out my free Underground Mortgage Refinancing Videos.

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

Here’s a quick sample to get you started on the road to your best refinance ever without overpaying one penny.

Refinance Mortgage Rates – Banks vs Brokers

Are you looking for the best refinance mortgage rates for your next home loan but aren’t sure if going through a bank or a broker is the best option? Did you know that both banks and brokers profit from hidden markup of your mortgage rate, but only one is required to disclose the markup? Choosing the wrong person to arrange your home loan can be an expensive mistake you don’t want to be paying for the next 30 years. Here are several of my best tips before you refi to help you get the lowest refinance mortgage rates for your next home loan without paying junk fees.

Get the Lowest Refinance Mortgage Rates

Mortgage refinancing is a huge industry and practically everyone in the business is trying to make a buck at your expense. Banks and Brokers are no exception to this; in fact, according to the Secretary of Housing and Urban development the hidden markup I’m discussing here will be responsible for your friends and neighbors in the United States overpaying sixteen billion dollars this year alone.

What is this hidden markup that’s a part of even the best refinance mortgage rates? I am of course talking about Yield Spread Premium (YSP). Yield Spread Premium is actually a fee paid to the broker arranging your home loan for locking and closing with higher than necessary refinance mortgage rates. Think of YSP as an incentive, a kickback really, paid by your lender to the broker for overcharging you.

Brokers Do It, Banks Do It Too

Yield Spread Premium is an incentive for brokers to mark up your mortgage rates paid by the lender. YSP doesn’t apply to banks because they are the lender backing the loan. In the bank’s case the premium they make by giving you higher than market refinance mortgage rates is called Service Release Premium. The bank knows they make the majority of their profits by selling home loans to investors on the secondary market and home loans with higher than market rates bring them a premium profit. This profit realized by the bank from overcharging you is the Service Release Premium, which accomplishes the same thing as Yield Spread Premium…less cash in your pocket. The kicker is thanks to a loophole in the Real Estate Settlement Procedures Act your bank isn’t required to disclose any of this hidden markup of your interest rate.

How to Get Wholesale Refinance Mortgage Rates

The good news is that getting wholesale refinance mortgage rates is as simple as finding the right person to arrange your next home loan. It’s not as hard as you think; you don’t have to be a personal finance guru or have a cousin in the business to get wholesale mortgage rates. You simply have to find a mortgage broker willing to work for a flat origination fee of one percent without taking Yield Spread Premium on your home loan.

You can learn more about finding the right person to give you wholesale refinance mortgage rates without paying junk fees by checking out my free Underground Mortgage Refinancing Videos.

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

Here’s a quick sample today to get you started finding the right broker for the job.

Should I Refinance My Mortgage?

Are you considering refinancing your home loan but are sitting on the fence with the question Should I Refinance My Mortgage? There’s a lot of bad advice online when it comes to mortgage refinancing; however, answering this question for your self is easier thank you think. Here are several tips to help you answer the question “Should I Refinance My Mortgage” without paying for hidden markup and junk fees.

Should I Refinance My Mortgage This Year?

Many financial advisors will answer your question Should I Refinance My Mortgage with the two percent rule of mortgage refinancing. The two percent rule states that you should never consider mortgage refinancing unless the new interest rate is exactly two percent lower than your old interest rate. This is boneheaded advice on a number of different levels that I’ll show you in a moment.

Instead of relying on the two percent rule to decide if a new home loan is right for you it makes more sense to evaluate your options on a cost per savings basis. Consider first that it’s going to cost you money at closing to refinance your home loan. The largest of these is the loan origination fee paid to the person arranging your mortgage refinancing. Ideally you’ll pay one percent of your loan amount for loan origination to a broker that doesn’t accept lender paid compensation for marking up you interest rate; however, that’s a topic for another discussion.

Cost vs. Savings Mortgage Refinancing

Suppose for instance you are refinancing your home loan for $250,000. The existing interest rate is 6.75% and you’re currently paying $1,620 a month. The broker quotes you and interest rate of 6.0% with a loan origination fee of 1.5% which means you’ll be out of pocket for $3,750 at closing. According to the previously discussed two percent rule most financial advisors that subscribe to this “wives tale” will tell you not to refinance.

What happens if we throw caution to the wind and decide to go through with a new home loan? After paying your broker the $3,750 for arranging the new home loan your new payment will be $1,498. Don’t break out the champagne yet; you still have to recoup the $3,750 you paid the broker before you realize any savings from a new home loan. You can easily calculate how long this will take by dividing your closing costs by the difference in your new payment amount. In this example take the difference of your new payment amount $1,620 – $1,498= $122 per month and divide your closing costs by this amount. ($3,750 / 122 = 30 months)

Is a New Home Loan Right For You?

In this example it will take 30 months, which is two and a half years, to recoup the broker’s fee before you realize any savings from mortgage refinancing. Consider that it can take 30 years (or longer) to pay off the average fixed rate home loan and two years sounds like a mere drop in the bucket. If the amount of time it takes to recoup your expenses from refinancing with the lower payment amount is acceptable for you then mortgage refinancing is probably a good idea for your situation.

You can learn more about getting your next home with wholesale rates by checking out my free Underground Mortgage Refinancing Videos.

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

Here’s a quick sample video that exposes the reason all of your neighbors are paying too much for their home loans. Register today to get the full story.

Mortgage Rates Comparison

Many homeowners believe mortgage rates comparison shopping is the best way to save money on a home loan. If you’re out to buy new kitchen appliances this is the way to go; however, what you don’t know about relying on mortgage rates comparison could cost you thousands of dollars. Here are several of my best tips for using mortgage rates comparison to make an informed decision and save thousands of dollars in the process of your next home loan.

Mortgage Rates Comparison

Did you know that your neighbors are throwing away thousands of dollars because of unnecessary markup of their home loans? If you approach mortgage rates comparison shopping the same way as you would shopping for kitchen appliances you’ll be overpaying also. In fact, according to the Secretary of Housing and Urban Development homeowners in the United States will overpay sixteen billion dollars this year due to hidden markup of their home loans. This hidden markup is due to a little-known fee paid by the lender called Yield Spread Premium.

So, you say that you’ve never heard of Yield Spread Premium? Don’t worry, most of your neighbors haven’t and that’s the reason that mortgage rates comparison shopping never works out. Simply put, lenders reward loan originators for locking and closing your home loan with a higher than necessary interest rate. Both your lender and broker know the interest rate you could have; however, the broker justifies marking it up because their markup makes home loan rates “retail.”

You Can Get Wholesale Mortgage Rates

Despite what your broker tells you, this markup for Yield Spread Premium is completely unnecessary because you’re already paying this person a perfectly reasonable loan origination fee. Any amount of Yield Spread Premium taken on your home loan in this case is just plain dishonest.

Earlier I mentioned that mortgage rates comparison shopping doesn’t work. The reason for this is that all of the quotes you get when making a mortgage rates comparison include the same markup. Comparison shopping will only get you the best of the worst when it comes to your home loan. Instead of relying on a mortgage rates comparison to find a home loan that includes unnecessary markup you can get a wholesale interest rate for your next home loan simply by finding the right person to arrange your next home loan.

Brokers, Not Bank Originated Home Loans

I always recommend that homeowners utilize mortgage brokers because banks are exempt from the laws that protect them from predatory lending practices and simply do not offer their customers wholesale interest rates. It’s true, banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margin on your home loan.

If you want to avoid paying for the hidden markup that comes with a mortgage rates comparison then you’ll want to find a mortgage broker willing to work for a flat loan origination fee (one percent is perfectly reasonable) without taking Yield Spread Premium on your home loan. There are plenty of honest, hard-working brokers out there willing to offer you a home loan with these terms; you just have to find one.

You can learn more about avoiding the hidden markup that comes with mortgage rates comparison shopping and avoiding other junk fees by checking out my free Underground Mortgage Refinancing Vidoes.
httpv://www.youtube.com/watch?v=be9md0A0_2c
Here’s a quick sample that exposes more of the truth about mortgages and why your neighbors are overpaying year in and year out.

Best Refi Rates For Your Next Home Loan

If you’re in the market for a new home loan and want the best refi rates available there are several things you need to know about mortgage rate quotes. Did you know that nearly all of the quotes you get online and from other mortgage companies have been marked up to create a hidden commission for the person arranging the mortgage? If you want the best refi rates, you have to avoid hidden markup that can add hundreds of dollars to your monthly payment. Here’s how to get the best refi rates for your next home loan without falling for the same lender tricks that your neighbors did.

How to Get the Best Refi Rates Available

What are the best refi rates around? Would you recognize the one if you found it? One of the problems you’ll encounter is that most homeowners don’t understand the retail nature of mortgage rates or know how to recognize the hidden markup that makes their best refi rates “retail.” Simply put, the best refi rates you can get are called par mortgage rates. Par means that the mortgage rates have not been marked up to create a commission for the person arranging your home loan and that you’re not required to pay discount points to qualify.

Discount points are a fee lenders charge to buy down your mortgage rate. One discount point is equal to one percent of your mortgage rate paid at closing and usually lowers your best refi rates by .25%. The problem with discount points is that in today’s market they are unnecessary and are a waste of money. Most homeowners are already familiar with discount points when it comes to getting the best refi rates; however, not very many homeowners today understand how the hidden markup raises their payments unnecessarily.

Yield Spread Premium Definition

The hidden markup of your quote intended to generate a fee from the lender is called Yield Spread Premium. This Yield Spread Premium is paid by mortgage lenders for locking and closing your home loan with a higher than necessary interest rate. Think of Yield Spread Premium as a kickback from the lender to the person arranging your mortgage for overcharging you. How can you tell if Yield Spread Premium is included when refinancing your home? If you’re refinancing with a mortgage broker you’ll find the kickback on your HUD-1 statement along with the mortgage origination fee. If you refinance with your bank you won’t find this fee anywhere on your loan documents because banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margin on your mortgage.

The fact that your bank doesn’t have to play by the same rules as other mortgage lenders should be reason enough for avoiding this type of lender when refinancing; however, many of your neighbors are still throwing thousands of dollars away every year because they simply don’t know any better. Truth be told, you can get wholesale, or Par mortgage rates simply by finding the right person to arrange your next home loan and cut hundreds of dollars from your payments.

You can learn more about getting the best refi rates available with a wholesale mortgage by checking out my free Underground Mortgage Refinancing Videos.

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

Here’s a quick sample to get you started filled with tips your neighbors wish they had when shopping for the best refi rates.