Who Will Refinance My Mortgage?

Are you struggling finding a lender to answer the question “Who will refinance my mortgage?” There are millions of homeowners unable to take advantage of historically low interest rates for one reason or another. Here are several tips to help you find a program and a lender to get your application for mortgage refinancing approved and save thousands in the process.

How Do I Refinance My Mortgage?

The most common reason people have been unable to refinance since the housing market meltdown is a lack of equity. If you’re underwater in your home loan and have not looked into the Home Affordable Refinance Program (HARP) you’re missing a great opportunity. The only catch with this government refinance program is that your home loan must be backed by Fannie Mae or Freddie Mac prior to June 1st, 2009.

Most underwater homeowners that are not HARP eligible do not qualify for this reason. HARP 3.0 is rumored to remove this requirement but has not happened yet.

Should I Refinance My Mortgage?

The first thing you need to do is answer the question “Should I Refinance My Mortgage?” Most homeowners do this by figuring out how long it’s going to take breaking even on closing costs. The way you break even recouping your out-of-pocket expenses when refinancing is by lowering your monthly payment.

You can approximate the amount of time it’s going to take you to break even by adding up all of your closing costs and dividing by the amount your payment is going down. This will tell you the number of months it’s going to take to break even. If you sell or refinance again before breaking even you’re losing money no matter how low your interest rate.

Who’s Going To Refinance My Mortgage?

Shopping for a mortgage lender can be a confusing and frustrating process, especially if you’re shopping for a lender’s approval. Many homeowners throw fees and rates out the window only focusing on getting the first approval available. Others focus on getting the lowest refinance rates at the expense of fees. Either approach results in overpaying thousands of dollars, something that can be avoided.

Are you shopping for mortgage approval? Consider focusing your efforts on government refinance programs from the VA, FHA, or HARP 3.0 when available.

You still need to focus on fees and rates but in this case enlisting the help of a mortgage broker can help balance finding an approval with paying less in closing costs.

How Do I Pay Less To Refinance My Mortgage?

Once you’ve decided if refinancing is worthwhile for you the next step is to choose a program. If you need an FHA home loan with a 30-year fixed interest rate then all of your quotes should be for that program. Don’t let a fast-talking loan officer confuse you by quoting refinance rates across different programs.

Comparing mortgage offers across different lenders from identical programs is the only way to make an apples to apples comparison of refinance rates and fees.

Your next step in getting the best deal for your home mortgage is to focus on the fees you can control. Page two of your Good Faith Estimate details the loan origination fee, yield spread premium and any discount points. For most people paying discount points is a waste of money so requesting zero point quotes is a good starting point.

Page three has a comparison table you can refer to if you’d like to see how points affect your monthly payment.

The next largest fee that you control is the loan origination fee. This is paid to the person or company arranging your home loan. Most brokers will tell you that one percent is standard; however, I’ve reviewed community based credit unions that charge as little as $400 for loan origination.

You might find that some loan officers are unwilling to negotiate settlement charges because if they do the lender takes the difference out of their commission. If this is the case simply move on to the next lender. The less you pay closing on your new home loan the more you’ll benefit from today’s low refinance rates.

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You can learn more about getting the best deal from today’s best mortgage lenders by checking out my free Underground Mortgage Videos.

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How To Lower Your Mortgage Payment By 25%

With refinance rates hovering near historic lows now is the time to take advantage, especially if you’ve been putting it off. Even if you think you won’t qualify there are government refinance programs that can get you approval quickly. Here are several tips to help take advantage of today’s low refinance rates and slash your payments by 25% or more.

According to one survey by mortgage giant Freddie Mac the average homeowner lowered their interest rate by 31% refinancing in the third quarter of 2012. This means opportunities still exist if you’ve been procrastinating or were previously denied.

Refinancing with a 30-year fixed rate mortgage is currently averaging 3.54 percent according to Freddie Mac. Surprisingly there are still millions of homeowners out there paying six percent or more.

If you purchased your home under the conforming loan limit of $417,000, refinancing could lower your payment by an average 25% based on today’s refinance rates reported by Freddie Mac.

Underwater Mortgage No Longer a Barrier

If you’re underwater (meaning you owe more than your home is worth) the government refinance program known as the Home Affordable Refinance Program (HARP) can get you approved. President Obama eliminated the 125% loan-to-value requirement meaning millions more underwater homeowners can qualify. The only catch is that your mortgage must be backed by Fannie Mae or Freddie Mac before June 1st, 2009.

If your mortgage is privately held and you don’t meet the Fannie Mae/Freddie Mac requirement there’s not much you can do until HARP 3.0 arrives as it is rumored to remove this requirement.

How Much Will Refinancing Save You?

Suppose you purchased your home for $300,000 at 5 percent several years ago. If you have 80% equity in your home you’ll owe $240,000. Your original mortgage payment was $1610 and qualifying for today’s refinance rates at 3.54% will slash that to $1083 per month. That’s a savings of $527 per month or 33% lower payments.

Is refinancing your home worthwhile? It is if you can balance your potential savings with how much it’s going to cost you closing on the new home loan. Overpaying closing costs like the loan origination fee or discount points can make refinancing a losing proposition regardless of your refinance rates.

You Can Pay Less For Mortgage Refinancing

Assuming you have a credit score of 720 or better, qualifying for today’s best refinance rates isn’t difficult. If you’re sitting at less than 720 and you find lenders are quoting you higher interest rates than they’re advertising the likely culprit is that credit score. The quickest way to improve your credit score is to pay down the balances on all of your credit accounts below 30% of the limit.

Speaking of your credit, if you’re thinking about refinancing your mortgage the first thing you should do before anything is check your credit reports for errors. You can do this for free by visiting the government mandated website AnnualCreditReport.com. If you want to check your credit score there is a fee; however, if you’re a member of a credit union you may be able to get low cost credit monitoring that allows you to stay on top of your credit score throughout the year.

Should you pay that loan origination fee? There are still no fee refinance offers available but you’re trading higher mortgage rates for having the loan origination fee and other closing costs paid for you. The more you pay at closing or by accepting higher refinance rates you’re getting less benefit from today’s lowest refinance rates.

The good news is that many of the closing costs you find in section 800 of your Good Faith Estimate are negotiable. You can pay less for the mortgage origination fee and avoid junk fees like processing, administrative, and rate lock fees simply by questioning and negotiating to pay less or not at all.

How To Quickly Break Even On Your Closing Costs

The test of how good of a deal you’re getting refinancing your mortgage comes not from getting the lowest interest rate but how much you’re paying at closing. Closing costs can be recouped as a side effect of lowering your payment.

You can approximate your break-even point by adding up all of your out-of-pocket expenses including any discount points you’re paying and diving by the amount your payment is going down. This will tell you the number of months it’s going to take to recoup your closing costs. Keep in mind that this calculation only works if you keep the same term-length when refinancing. If you go with a longer term length, say 30-year from a 15-year mortgage you’re never going to break even recouping closing costs thanks to higher finance costs for those extra years.

Suppose for example your out-of-pocket closing costs total $4,000. Refinancing your 30-year mortgage with another 30-year home loan saves you $527 per month from the previous example. In this case it’s going to take you 8 months to break even. In this example mortgage refinancing certainly makes sense based on the savings and speedy recovery of your expenses.

Depending on how much you pay it could take as long as two years to break-even. If you sell or engage in what many financial advisors call serial refinancing you’ll never recoup your out-of-pocket costs meaning you’re losing money no matter how low your refinance rates.

Click Here For More Details…

You can can learn more about getting the best deal shopping for your next home loan while avoiding unnecessary lender fees and markup by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to get you started shopping from today’s best mortgage lenders without paying junk fees…

Lowest Rates Mortgage Lenders

If you are in the process of taking out a new mortgage loan to refinance you existing mortgage or purchase a new home, there are several things you’ll want to know about mortgage rate quotes to avoid paying too much. You may have arrived here searching for the lowest rates mortgage lenders; however, getting the lowest mortgage rates can be tricky due to hidden markup and junk fees. Here are several of my best mortgage tips to help you find the lowest rates mortgage lenders for your next home loan without paying junk fees.

Lowest Rates Mortgage Lenders

The first thing you need to know about mortgage lenders is that not all lenders are the same. Choosing one type of lender over another can result in paying higher mortgage rates. There are three types of mortgage lenders that I’ll discuss today, as well as the pros and cons of each. The first type is your bank or credit union. The main advantage of taking out a mortgage with your bank is convenience…what could be easier than transferring funds from your checking account every month to pay your mortgage bill? Bank mortgage rates aren’t the greatest, especially when you compare them to wholesale mortgage rates. This is because the bank makes the majority of their profit from your home loan by selling your mortgage to investors on the secondary market. Home loans with higher than market mortgage rates make them a premium profit known as Service Release Premium. Another problem with bank originated mortgage loans is that thanks to a little known loophole in the Real Estate Settlement Procedures Act (RESPA) your bank is not required to disclose their markup or profit margin on your home loan.

The second type of lender we’re going to discuss today is known as a broker bank. In the 90s the Banking Lobby in the United States successfully lobbied Congress to have the RESPA laws changed to exclude banks. This means banks have an unfair advantage over mortgage brokers that are required to disclose any markup of your mortgage rate for a profit. When the law changed a number of mortgage companies and brokers changed their business models to operate like a bank. This means they formed companies that fund home loans with their own cash rather than reselling loans from wholesale lenders. This change in their business model allows these mortgage broker banks to exploit the same loopholes enjoyed by banks. If you take out a mortgage loan from your bank or a broker bank you’ll never get the lowest mortgage rates when refinancing or purchasing your home. How do you recognize a broker bank? Simply ask what name they close your mortgage under. If they close in the name of their company rather than a wholesale lender you know you’re dealing with a mortgage broker bank.

Wholesale Mortgage Loans

Most people, including many mortgage brokers, will tell you that you can’t get wholesale mortgage rates. While many mortgage brokers markup mortgage rates offered by wholesale lenders for a commission known as Yield Spread Premium, it is possible to find a mortgage broker willing to work for a flat origination fee of one percent without marking up your mortgage rate. By paying the origination fee up front, (one percent is perfectly reasonable for the mortgage broker fee) you avoid unnecessary inflation of your mortgage payment. So how do you find a wholesale mortgage loan? You might think by contacting a wholesale mortgage lender directly you’ll be able to cut out the middleman and refinance or purchase with a wholesale mortgage rate. Unfortunately, this isn’t the case. Wholesale mortgage lenders have retail lending divisions so if you want a wholesale mortgage rate you have to find the right mortgage broker to arrange your home loan.

How to Find the Right Mortgage Broker

Getting a wholesale mortgage rate isn’t as hard as it sounds. You don’t have to be a financial guru to pull it off; you’ll just need to find the right mortgage broker for the job. The problem is that many shady mortgage brokers rely on Yield Spread Premium to boost their bottom line at your expense. You’re already paying a perfectly reasonable origination fee for this person’s work arranging your home loan so any commission paid by the mortgage lender for marking up your mortgage rate only drives up your monthly payment unnecessarily.

How do you find the right mortgage broker when refinancing or purchasing your home? Start by telling prospective mortgage brokers that you understand how Yield Spread Premium works and that you will not accept any home loan that includes this markup. Offer to pay a reasonable origination fee for the mortgage broker’s services. One percent is a perfectly reasonable origination fee and there are many honest mortgage brokers willing to arrange your home loan without taking Yield Spread Premium.

2010 RESPA Changes

In a lackluster attempt to protect homeowners from mortgage broker abuse of Yield Spread Premium, the Department of Housing and Urban Development (HUD) enacted several changes effective January 1st, 2010. Mortgage brokers now have to include Yield Spread Premium as part of the origination fee in your loan documents. This doesn’t really help homeowners because mortgage brokers will go on telling you that since the lender is paying that portion of the origination fee and it’s not coming out of your pocket that you shouldn’t worry about it. No big change there. HUD has also revamped the Good Faith Estimate and you will now receive three pages of low-balled fees instead of the two page GFE you’re used to. These changes are pretty much cosmetic and do very little to protect homeowners from abusive mortgage practices. Of course, banks and broker banks are still exempt from RESPA legislation and can charge their borrowers pretty much whatever they like.

You can learn more about getting a wholesale mortgage rate for your next home loan by checking out my Underground Mortgage Refinancing Videos.

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Here’s a sample of what you’ll get when you sign up…this video shows you more about how Yield Spread Premium drives up your mortgage payment unnecessarily and what you can do to avoid it.

Mortgage Rate Watch

If you’ve been keeping an eye on recent mortgage rate trends or are searching the web for mortgage rates before refinancing your home there are several things you need to know about mortgage quotes you find online. Internet mortgage giants and even your local mom and pop mortgage broker quote mortgage rates that have been marked up to create the commission known as Yield Spread Premium. Never heard of Yield Spread Premium? Don’t sweat it, neither have 98% of your neighbors. According to the Secretary of Housing and Urban Development your neighbors, in fact most Americans, will overpay sixteen billion dollars for their home loans this year alone. Here’s how you can avoid being part of this statistic and get the best mortgage refinancing rates for your next home loan without paying unnecessary closing costs.

Yield Spread Premium Definition

So what is this Yield Spread Premium? Simply put it is a commission paid by the lender to the person arranging your mortgage for locking and closing with a higher than necessary mortgage rate. Yield Spread Premium is paid in addition to loan origination fees you’re already paying this person for the work they do arranging your home loan. Think of Yield Spread Premium as a form of “double dipping” at your expense.

You might think “Why do I care about Yield Spread Premium if the fee is being paid by the lender and not coming out of my pocket?” This is in fact an argument put forth by many mortgage brokers. They tell you not worry about the paid outside of closing (POC charges) found on your Good Faith Estimate and HUD-1 Settlement Statement because the fees are paid by the lender. Think for a moment why would the lender pay this fee for you? I mean really, what’s in it for them? We’ve all learned how evil and greedy banks and credit card companies are after the recent financial bailouts so why would they do anything that cost them a buck?

The reason mortgage lenders pay your mortgage broker Yield Spread Premium is because there IS something in it for them. In fact, Yield Spread Premium is the reason lenders realize the majority of their profits on your home mortgage loan. You see lenders don’t just sit around collecting interest from your home loan to make a buck. Mortgage lenders sell their home loans to investors on the secondary market. Home loans with higher than market mortgage rates bring them the most profit. This is why mortgage lenders reward mortgage brokers for closing loans with higher than necessary mortgage rates…the higher the mortgage rate, the higher the reward. Unfortunately for you, the higher your mortgage rate, the higher your monthly payment will be; however, an unnecessarily high mortgage payment can be avoided.

Avoiding Yield Spread Premium

Feeling overwhelmed with the prospect of refinancing your mortgage? Don’t sweat it…you don’t have to be a financial guru to get a wholesale mortgage rate that doesn’t include Yield Spread Premium. All you need to do to avoid this unnecessary markup is find the right person to arrange your next home loan. Start by approaching local mortgage brokers and tell them you understand how Yield Spread Premium works. Offer to pay a flat origination fee for their services of one percent and be sure to tell them that you won’t accept any mortgage loan that includes Yield Spread Premium.

You can learn more about getting a wholesale mortgage rate for your next home loan while avoiding unnecessary closing costs by registering for my free Underground Mortgage Videos.

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Here’s a sample of what you get for free you sign up…this video shows why your neighbors pay too much for their home loans and how you can avoid unnecessary markup and junk fees.

Wholesale Mortgage Loans

If you’re considering refinancing your home loan you want the lowest mortgage rate and closing costs for your next mortgage. Refinancing with wholesale mortgage loans can not only get you the lowest possible mortgage rates but will help you avoid unnecessary fees… if you know how to do it. Getting wholesale mortgage loans can be tricky for the uninitiated; however, you don’t have to be financial gurus to get wholesale mortgage loans… you just need to know where to go. Here are several tips to help you get a wholesale mortgage loan when refinancing your home without paying unnecessary fees or markup.

Shopping for Wholesale Mortgage Loans

The first thing you need to know about wholesale mortgage loans is that they are not available to members of the public. If you contact a wholesale lender yourself you’ll be dealing with that lender’s retail division, not the wholesale lender itself. Before we can discuss how to go about getting wholesale mortgage loans it’s important to understand what makes a home loan wholesale and how wholesale lenders operate.

Before you can find a wholesale mortgage loan you need to know a little about the different types of mortgage lenders. The three types of mortgage lenders I’ll discuss today are banks, mortgage broker banks, and wholesale mortgage lenders. Bank mortgage loans can seem like a convenient way of refinancing your home loan right? What could be easier than having your mortgage payment automatically transferred from your checking account every month? The problem with bank originated mortgage loans comes from a little known loophole in the Real Estate Settlement Procedures Act that allows your bank to hide their profit margin and markup of your home loan.

Banks fund their mortgage loans with the bank’s money and therefore set their own mortgage rates. Your bank knows what wholesale mortgage rates are but marks up their mortgage rates up to collect a profit when your home loan is sold on the secondary market. Because of the loophole in RESPA legislation the bank is not required to tell you how much they’ve marked up your mortgage loan. The bottom line you need to know about bank home loans is that you’ll never get wholesale mortgage loans from your bank.

What about mortgage broker banks? When the RESPA laws were changed to exclude banks many mortgage brokers restructured their businesses to take advantage of the same loopholes enjoyed by your bank. These mortgage brokers formed lenders that fund their home loans with their own money and were therefore exempt from RESPA laws just like your bank. How can you recognize a mortgage broker bank? Simply ask if your home loan closes in their company’s name…if the mortgage closes in the broker’s name and not the wholesale lender you know you’re dealing with a mortgage broker bank.

Wholesale Mortgage Lenders

Wholesale mortgage lenders offer their products through mortgage brokers and other retail mortgage companies. They don’t offer wholesale mortgage rates to the public, but that doesn’t mean you can’t get wholesale mortgage loans. What makes a mortgage loan wholesale? Aside from the fact that it comes directly from a wholesale lender and not a bank or broker bank wholesale mortgage loans have mortgage rates that have not been marked up to create a commission for the person arranging your loan and do not require discount points be paid at closing. This type of wholesale mortgage rate is also known as a par mortgage rate. Your goal for refinancing your home should be to get as close to par as possible for your mortgage rate. How do you take advantage of par mortgage rates since wholesale lenders do not offer them to members of the public you ask? Simply find the right mortgage broker to arrange your wholesale mortgage loan without marking up your mortgage rate or charge you unnecessary fees.

Mortgage Broker Fees

Before you can find the right mortgage broker to arrange your home loan you’ll need to understand mortgage broker fees and compensation. Your mortgage broker gets paid for their work from a number of sources. The first, most obvious fee is the loan origination fee that appears on your Good Faith Estimate. Your loan origination fee is a flat fee you pay for the mortgage broker’s part in arranging your home loan. This fee is usually a percentage of your loan amount and a reasonable amount to pay the mortgage broker for loan origination is one percent of your home loan amount. Many brokers try and charge more than one percent; however, one percent is more than ample compensation for the mortgage broker’s work on your home loan.

The second way your mortgage broker get’s paid that we’re going to discuss today is the lender paid fee known as Yield Spread Premium. Mortgage lenders reward brokers that lock and close home loans with higher than necessary mortgage rates with a fee known as Yield Spread Premium. For every .25 percent that your mortgage broker overcharges you the lender pays them an additional one percent of your loan amount as a commission, this fee is paid in addition to the origination fee you’re already paying the broker. It goes without saying if you want wholesale mortgage loans you’ll need to find a mortgage broker that doesn’t take Yield Spread Premium in addition to your loan origination fee. Get yourself a mortgage rate that doesn’t include Yield Spread Premium and you’ll have a par mortgage rate, the wholesale mortgage loan you’ve been looking for.

How do you find the right mortgage broker to arrange wholesale mortgage loans? Start by telling potential mortgage brokers that you understand Yield Spread Premium and will not take a mortgage that includes this markup. Tell them you will pay a reasonable origination fee for their services but want a par mortgage rate for your next home loan. Once you’ve found the right mortgage broker for the job you’ll be on the path to refinancing your home with a wholesale mortgage loan.

You can learn more about wholesale mortgage loans and avoiding unnecessary fees when refinancing your home by checking out my free Underground Mortgage Refinancing Videos.

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Here’s a sample you need to know about this unnecessary markup of your mortgage rate for kickback from the lender known as Yield Spread Premium. Register for these mortgage videos today while this is still a free offer.