4 Mortgage Refinancing Roadblocks

If you’re considering taking advantage of today’s low refinance mortgage rates, there are several roadblocks that could prevent you from qualifying. Your home’s loan-to-value ratio and credit status all weigh heavily on your application for mortgage refinancing. Here are four costly roadblocks you’ll want to avoid when refinancing your home loan with one of the top mortgage lenders like Amerisave.

Your Mortgage Loan-to-Value Ratio

One of the most common reasons for having your mortgage refinancing application denied is not having enough home equity. If you’re underwater in your home and your loan-to-value ratio is higher than 125% it will be difficult to refinance, even under the government’s old HARP program. The new HARP 2.0 should be widely available by the first quarter of 2012, which will not have loan-to-value requirements, meaning homeowners who are underwater in their mortgages now will be able to take advantage of today’s low refinance mortgage rates.

Your Mortgage Loan is too Big

If you’re currently paying on a jumbo mortgage loan and you don’t have superb credit you may find mortgage refinancing is out of reach. If your current mortgage balance is more than $417,000 your loan is most likely categorized as jumbo. If you find your application is denied because it falls outside the conforming loan limit of $417,000, you may still be able to qualify for mortgage refinancing by paying down the balance (cash-in refinancing) below the limit. This will also lower your loan-to-value ratio and the mortgage refinancing rates that you’ll qualify.

Bad Credit Mortgage Refinancing

Another common barrier to mortgage refinancing is your credit score. One of the most common mortgage mistakes is neglecting to check your credit reports for mistakes before applying. If your credit score is less than 620 you could have problems getting your application approved. Depending on how close to 620 you are after getting approved you may find the refinance mortgage rates you’re being quoted are much higher than what lenders are advertising. If you have less than perfect credit you may find an FHA mortgage is more accessible and can get you approved for mortgage refinancing. You won’t qualify for the rates you’re seeing on television; however, your payment could still go down based on getting approved.

Lack of Documented Income

If you’re self-employed or have lost part of your income, lenders could deny your application for a new home loan. Stated income mortgages are a thing of the past which makes mortgage refinancing for the self-employed extremely difficult. If your application for mortgage refinancing is denied because of your income a co-borrower could get you approved. You might also try shopping around for another lender with different underwriting requirements.

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You can learn more about getting qualified for today’s lowest refinance mortgage rates without paying unnecessary fees by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started with today’s lowest refinance mortgage rates for your next home loan…

Jumbo Mortgage Rates Scam

If the value of your home is above the conforming loan limit for your region of the country, Jumbo Mortgage Rates are a concern for you when refinancing your home. What you might not know is what has your broker salivating over closing and is the hidden markup found in nearly all Jumbo Mortgage Rates. Here are the basics you need to know about refinancing with Jumbo Mortgage Rates to help you avoid paying too much at closing and thousands of dollars every year in hidden markup.

Jumbo Mortgage Rates Basics

If the dollar amount of your home loan is above the conforming loan limit set each year by Fannie Mae and Freddie Mac you have a jumbo mortgage loan. This means that Fannie Mae and Freddie Mac won’t back the entire amount of your home loan. Because of this, Jumbo Mortgage Rates are typically higher than interest rates found on conforming home loans because the lender is assuming more risk of foreclosure.

What you need to know about Jumbo Mortgage Rates is while it’s true you may not be able to avoid this risk based markup by the lender, what you need to avoid at all costs is commission based markup by the broker. Did you know that according to the Secretary of Housing and Urban Development, homeowners in the United States, your neighbors, will overpay sixteen billion dollars this year alone due to commission based markup of their home loans? Most homeowners have never heard of the fee lenders pay for this markup known as Yield Spread Premium, let alone what it does to their monthly payments.

Avoiding Hidden Mortgage Markup

The good news is that you don’t have to be a personal finance guru to avoid unnecessary markup. I’m going to show you how to get as close to wholesale as possible when it comes to Jumbo Mortgage Rates. First of all, you’ll need a clear understanding of mortgage Yield Spread Premium (YSP). What is it? Simply put, YSP is a commission, fee, kickback, whatever you’d like to call it paid to the person arranging your loan for locking and closing with higher than necessary Jumbo Mortgage Rates.

I say higher than necessary because both the broker and the lender know the lowest interest rate your loan can be approved; however, the broker salivating in the corner knows that if he locks and closes higher he’ll get a commission from that lender for overcharging you. Here’s an example to illustrate how this works.

Yield Spread Premium in Action

Suppose for example, you are refinancing your California jumbo home loan for $500,000. Your broker charges you an origination fee for their work of 1.5% and quotes you at 6.5%. This means your monthly payment on a fixed-rate, thirty year home loan will be $3,160. This is a serious payment to meet every month. What you don’t know about this home loan is that the lender actually approved you for Jumbo Mortgage Rates at 6.0%, and the broker marked it up to 6.5% without telling you.

How can this be legal you ask? Changes to the RESPA laws in 2010 did not abolish Yield Spread Premium like many homeowners think, the law only requires brokers to disclose the fee they receive for it alongside the origination fee they are charging you. The problem is most brokers are very good at explaining away Yield Spread Premium. “Hey that fee isn’t coming out of your pocket, don’t worry about it.”

So what does this hidden insidious markup of Jumbo Mortgage Rates do to your monthly payments? If you had the jumbo mortgage rates you deserve at 6.0% your monthly payment on the same home loan would only be $2,997. That’s a difference $163 per month, $1,956 per year all because the broker took advantage of you. Don’t let it worry you too much, the good news today is that now that you know about Yield Spread Premium you can avoid paying for it.

You can learn more about avoiding this hidden markup of your Jumbo Mortgage Rates by checking out my free Underground Mortgage Refinancing Videos.
Here’s a quick sample that exposes the truth about this unnecessary commission known as Yield Spread Premium.