Home Refinance Tips Your Lender Will Wish You Didn’t Know

Are you considering taking advantage of current home refinance rates? Whether or not you’re getting a good deal for your next mortgage loan depends on the fees you’ll pay, not just on how low the refinance rates. Here are several tips before you refi to help you get the lowest home refinance rates without overpaying the lender at closing.

Home Refinance Settlement Fees

Every home loan has settlement fees that have to be paid one way or another at closing. Even those no-fee refinance offers have closing costs; the fees are being paid by the lender in exchange for you agreeing to higher home refinance rates.

The reason lender fees are so important on your home refinance is that you have to recoup your out-of-pocket expenses before you’ll benefit from having a lower interest rate. The more you pay at closing for things like the loan origination fee the longer it’s going to take you to break even.

Part of answering the question “Should I Refinance my home” is figuring out how long it’s going to take you to break even recouping your closing costs.

How to Calculate Your Home Refinance Break-Even Point

It’s not difficult to approximate your home refinance break-even point. You can use a simple mortgage calculator like the one below to figure out how much your monthly payment will be going down after your home refinance. Simply plug in the refinance rates you’re being quoted and your desired term-length and click the calculate button.

Simple Mortgage Calculator

Loan Amount: Years: Mortgage Rate:

Annual Taxes: Annual Insurance:

Monthly Payment =

Once you know the amount that your payment is going down each month after your home refinance, divide the total closing costs found on your Good Faith Estimate by your savings. This will tell you the approximate number of months it’s going to take to break even recouping lender fees on your home refinance.

This is only an approximation because it doesn’t take into consideration factors like income taxes and changes in your mortgage term length; however, as long as you’re not lengthening your term-length the approximation is good enough to make an informed decision.

Are you okay with the amount of time it’s going to take recovering your closing costs from your home refinance savings? If so, then paying for mortgage refinancing probably makes sense in your situation.

What About Those No Fee Refinance Offers?

You’ll see lenders like Bank of America advertising no fee home refinance loans from time-to-time. If you don’t have the cash to pay your settlement fees at closing these offers might seem like your only option. There is an alternative to accepting higher refinance rates, which means your payments will also be higher than necessary.

Many lenders will let you roll your closing costs into your loan balance meaning you’ll get to take advantage of current home refinance rates without markup.

You’ll find the credit you get for taking higher home refinance rates on page two of your Good Faith Estimate. Look at section A item 2. “Your credit or charge (point) for the specific interest rate chosen. The first box reads “The credit or charge for the interest rate of % is included in “Our origination charge.” (See item 1 above.)”

This credit is known as Yield Spread Premium and works like a discount point in reverse. For every .25% markup on your home refinance rates that you agree to the lender credits one percent of your mortgage amount towards your settlement fees.

Is agreeing to Yield Spread Premium on your home refinance a good idea? You can run the numbers using a simple mortgage calculator to figure out how the markup affects your monthly payments; however, the longer you keep this home loan the more you’ll wind up overpaying the lender down the road.

Should You Pay Discount Points?

Discount points are a fee leftover from the 1980s when homeowners were paying double-digit interest rates. You could pay one percent of your mortgage loan amount at closing and the lender would lower your rate by .25%.

Today home refinance rates are still near historic lows making the benefit of paying discount points extremely small. If you’re curious how paying discount points will affect your payments there is a table on page three of your Good Faith Estimate but most homeowners do not benefit from paying this fee. Make sure the home refinance quotes you get as a starting point are zero point quotes.

How to Shop For the Lowest Mortgage Rates & Fees

The first step to getting the best deal on your home refinance is to choose a mortgage program. Do you need a 30-year fixed rate home loan? How about an FHA streamline refinance? Once you know which mortgage program that you need don’t let loan officers quote interest rates from programs you’re not interested in.

The only way to get an apples-to-apples comparison of mortgage lender fees is to compare quotes from identical programs.

Next, look at the loan origination fee. This is paid to the mortgage company or broker arranging your home refinance. Many loan officers will tell you that one percent is standard for the mortgage origination fee; however, I’ve reviewed several community credit unions that charge as little as $400 for their loan origination fee.

Remember, the less you pay at closing the more benefit you’ll get from your home refinance.

Finally, look at the fees found on page two of your Faith Estimate in section B. Comparing these fees from a variety of banks and credit unions will give you a good idea of what’s reasonable and what is outlandish. Mortgage fees tend to vary significantly from one lender to the next so don’t assume giants like Wells Fargo Mortgage are going to offer the best deals.

The most common mortgage mistake is focusing on getting the lowest home refinance rates at the expense of lender fees. If you’re shopping for the lowest interest rates and lender fees using the Good Faith Estimate you’re on track to get a better deal than 90% of your neighbors.

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You can learn more about paying less for your next home refinance while avoiding lender junk fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you get the lowest home refinance rates from today’s best mortgage lenders…”

Mortgage Refinance Opportunities Abound if You Qualify

Mortgage interest rates are near their lowest levels in fifty years if you qualify; however, getting qualified can be tricky unless you have pristine credit. You’ll still be able to get a mortgage refinance loan with less than perfect credit; it just might not be the lowest refinance rates you were expecting. Here’s an article from the Wall Street Journal with tips before you refi to make sure you’re getting the lowest refinance rates possible.

Years after the collapse of the real-estate market and resulting financial crisis, it takes nearly pristine credit scores and hefty down payments to get the best rates. “Since 2009, credit has become a lot tighter,” says Greg Reiter, who follows mortgage-backed bonds at RBS Global Banking & Markets.

Read More:

http://online.wsj.com/article/SB10001424052702303544604576436331698560662.html

Once you’ve qualified for the best refinance rates possible it’s important to pay close attention to the loan origination fee and closing costs to avoid overpaying. The test of how good of a deal you’re getting on your mortgage refi comes not from getting the best refinance rates but paying the least amount of fees. The reason your mortgage closing costs are so important is that you’ll have to recoup these out-of-pocket expenses before realizing any benefit from your new home loan. The more you pay closing on your refi the longer it’s going to take to break even.

You can learn more about your mortgage refinancing options without paying hidden markup or lender junk fees by checking out my free underground mortgage videos.

The Hidden Cost of Refinancing Your Mortgage

If you’re thinking about mortgage refinancing to take advantage of today’s best refinance rates there’s more to think about than just interest rates and fees. There is a hidden cost of refinancing that brokers rarely talk about that takes a large toll on your finances. Here are several of my best tips before you refi to help you avoid paying too much for your mortgage refi.

Mortgage Loan Amortization

If you take one thing away from this article it needs to be an understanding of mortgage loan amortization. What is home loan amortization? This is the process of paying down your home loan over time. Use a basic mortgage refinance calculator with amortization tables and you can see exactly what I’m talking about by the hidden cost of mortgage refinancing.

I’m going to use a simple example to illustrate this point. Suppose you buy your home this year for $250,000 with a five percent mortgage rate. Your monthly payment on this home loan is $1,342. During the first full year of payments you’ll pay $16,104, which is simply $1,342 x 12 months. Look at your loan amortization schedule (that chart from our mortgage payment calculator) and during the first year of payments $12,416.24 of your money is applied to interest! That goes into your lenders pocket and does nothing (zero, nada, zip, zilch) to pay down the principal balance on your home loan.

The first year of your mortgage payments you’ve only paid $3,688.41 towards the balance of your mortgage. Sure you bought the house but you’re a looooooong way from owning it. In fact, it will take 16 years of payments before more of your payment goes to paying down the balance than goes into the lender’s pocket. This is what is meant by the expression building equity in your home.

Mortgage Refinancing Resets The Clock

What happens when you mortgage refinance? You reset the clock on your payments and you’re back to year one, stuffing the lender’s pockets with your cash. This is the hidden cost of mortgage refinancing that no one talks about. Sure fees are important because that’s cash out of your pocket at closing; however, you’re taking hard-fought equity in your home and sticking it in someone else’s pocket. Use a mortgage calculator with your home loan balance and look at the amortization schedule for yourself before you decide if mortgage refinancing is a good idea.

How to Refinance Without Overpaying

It’s true that today’s best refinance rates are near a fifty-year low and pretty much everyone and their dog is on the mortgage refi bandwagon. If you’ve decide to take advantage of lower payments and don’t mind resetting the clock on your mortgage loan amortization you’ll want to pay close attention to the fees you pay at closing. The reason that fees are so important on your mortgage refinance is that you’ll have to recoup these expenses before gaining any benefit from the lower payment amount. The more you pay when closing on your refi the longer it will take to break even.

One of the more common mortgage mistakes is not negotiating origination fees and other closing costs. You can comparison shop fees and negotiate to pay less on your mortgage refi every time.

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You can learn more about paying less for your mortgage refinance by checking out my free Underground Mortgage Videos.

httpv://www.youtube.com/watch?v=be9md0A0_2c
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Here’s a quick sample to get you started refinancing today without unnecessary fees and markup.

Mortgage Refinance Myths Can Cost You Thousands

If you’re thinking about a mortgage refinance loan there is no time like the present to take advantage of the best refinance rates in fifty years. While getting today’s low mortgage rates is easy for most, the trick is avoiding unnecessary fees and markup. According to MortgageLoan.com these three mortgage refinance myths cost homeowners thousands of dollars unnecessarily:

While it seems like everyone is easily refinancing their home loans these days, refinance can actually be a muddy river to navigate. The more you know about the process ahead of time, the easier your journey will be. Discover the truth behind these three myths ahead of time to make sure that you don’t hit any hidden obstacles:

Read More:

http://www.mortgageloan.com/4-mortgage-refinance-myths-8742

The test of how good of a deal you’re getting on your mortgage refi is the amount you pay for the loan origination fee and closing costs. The reason mortgage refinance fees are so important is that you’ll have to recoup these expenses before gaining any benefit from your new home loan. The more you pay to close when refinancing, the longer it’s going to take you to break even.

One of the more common mortgage mistakes when refinancing is not negotiating lender closing costs and the broker’s fee. Most homeowners don’t realize these fees are negotiable and usually all you need to do is ask to pay lower amounts.

You can learn more about getting the best mortgage refinance rates for your next home loan without paying unnecessary fees or markup by checking out my free Underground Mortgage Videos.

The Secret to Getting the Lowest Mortgage Rates

Getting the lowest mortgage rates can be tricky, especially if you choose the wrong person to arrange your next home loan. Pick the wrong person and you’ll not only get too high a mortgage rate but you’ll pay mortgage junk fees in the process. Here are several tips to help you find the right person to arrange your next home loan while avoiding unnecessary markup and mortgage junk fees.

Mortgage Rate Secrets

When it comes to mortgage loans what you don’t know will hurt you. Did you know the average homeowner in the United States overpays $100 or more per month for their home loan? This because the person arranging the loan pulled a fast one with the mortgage rate… In fact, the Secretary of Housing and Urban Development stated this mortgage trick will cost homeowners in the United Sates sixteen billion dollars this year alone. Don’t want to be a victim of this statistic you say? You don’t have to be…and I’ve got the tools for you to ensure that you’re not.

Where to Get a Mortgage Loan

Before we get into where to find the perfect mortgage loan I should talk about where not to get a home loan.

1. Stay away from your bank. Banks are exempt from the Real Estate Settlement Procedures Act and are not required to disclose any of their markup or profit margins to you. If you take out a home loan from your bank you’ll never know how much you’ve overpaid because the bank is simply not required to tell you. Ignorance is bliss right? Only if you like throwing your money away…
2. Stay away from faceless Internet Mortgage lenders. We’ve all seen the commercials on TV; however, spend a few minutes reading the fine print from the Lending Trees of the world and you’ll quickly discover just how bad their junk fees are.
3. Avoid mortgage brokers that charge Yield Spread Premium and other junk fees. I’ll get into Yield Spread Premium in a moment as this is the hidden junk that causes most people to overpay.

So where is the best place to get a mortgage loan? The best home loan around isn’t going to be from a place, it’s from a person. That’s right, getting the best deal for your mortgage isn’t about shopping around for the best loan offer… it’s all about shopping for the right person to arrange your home loan.

Who Is the Right Person to Arrange Your Mortgage?

The right person isn’t a mortgage banker or the hotshot broker in the yellow pages with a company hummer. These people will be unwilling or unable to negotiate the type of mortgage deal that will get you the lowest possible mortgage rate. What you’ll need to find is a small-time, self-employed mortgage broker willing to work for a flat fee without marking up your mortgage rate for an “extra” commission. What is this extra commission that drives up most people’s mortgage payments unnecessarily wasting thousands of dollars? In the mortgage business the fee created when your mortgage rate is called “Yield Spread Premium.”

Yield Spread Premium Definition

Yield Spread Premium is an amount of money created when the person arranging your loan gets you to pay an unnecessarily high mortgage rate. The lender and your mortgage broker both know the interest rate you qualify; however, the broker overcharges you to collect this fee. Many mortgage brokers today are motivated solely by greed and line their pockets at their customer’s expense. The good news is that you can avoid this unnecessary markup of your interest rate and mortgage broker tricks saving thousands of dollars. It doesn’t matter if you’re refinancing your existing mortgage or taking out a purchase loan…these mortgage tactics work for both.

How does this mortgage rate markup work? Mortgage lenders reward brokers for loans that close with higher than necessary mortgage rates with a commission of 1% for every .25% they overcharge you. This is on top of the origination fee that they’re already charging you, double dipping their fee if you will. What you’ll need to avoid this is find the right mortgage broker instead of shopping for a loan offer. When you’re shopping for a mortgage broker tell them that you understand how Yield Spread Premium works and will not accept any mortgage that includes this markup. Offer to pay this person a flat, one percent mortgage origination fee for a home loan without Yield Spread Premium attached. There are honest mortgage brokers willing to work for one percent, you just have to find one.

What About Mortgage Junk Fees?

Just because you find a mortgage broker willing to work for a one percent origination fee doesn’t mean you shouldn’t be concerned about junk fees. There are a number of junk fees that mortgage brokers slip into their loans just to boost their fees. You should carefully review your HUD-1 statement for junk fees prior to closing. Don’t rely on the Good Faith Estimate you receive as this document is little more than marketing propaganda used to lure homeowners into overpriced mortgage loans. When it comes to fees your HUD-1 Settlement Statement is the final word.

If you find anything on your HUD-1 that resembles a mortgage broker courier fee or rate lock fee you should question consider taking your home loan somewhere else. These fees, especially rate lock fees are pure junk used by dishonest mortgage brokers to boost their profit at your expense. If you are working with a broker that charges a rate lock fee you can be certain you’re dealing with a dishonest mortgage broker that cannot be trusted…period.

You can learn more about avoiding junk fees and getting the lowest possible mortgage rate for your next home loan by registering for my free Underground Mortgage Videos. Here’s a sample of what you’ll learn when you sign up:

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Register today, these mortgage refinancing videos are yours free with no obligation.