Home Loan Refinancing Quick & Dirty

Are you in the market for home loan refinancing? If so there are several things you need to know about the home loan refinancing quotes you find online to avoid paying too much for your next mortgage. Did you know that nearly all of your neighbors are overpaying for their home loans because of a little known hidden markup of the mortgage rate? Avoid this hidden markup and you can take advantage of the wholesale nature of mortgage rates and slash $1,200 per year from your payment. Here are several of my best mortgage tips to help you cut the fat from your interest rate by avoiding hidden markup when home loan refinancing.

Home Loan Refinancing Online

The Internet is an excellent tool for home loan refinancing. You can quickly locate and compare home loan refinancing quotes from a variety of lenders. The problem with these quotes is that they all include a hidden markup known to mortgage fat cats as Yield Spread Premium. Before we go any further with the topic of home loan refinancing it’s important that you know all the ins and outs of how the person arranging your loan gets paid. It doesn’t matter if this person is a broker, a banker, or a faceless internet giant website like Lending Tree, they all markup of mortgage rates one way or another to boost their profits at your expense. Any markup of your interest rate means your monthly payment will be higher and you’ll have less cash in your pocket at the end of the month.

How to Keep More Cash in Your Pocket

Would saving a hundred dollars a month on your mortgage payment mean something to you? You might think a hundred dollars isn’t much but that amounts to one less bill you’re stretching your budget to cover and that much more cash in your pocket at the end of your month. Is saving $100 a month worth 45 minutes of your time? I can show you how AND you don’t have to be some kind of financial guru to pull it off. Here’s some background you’ll need to know to get started saving today.

I’ve mentioned this hidden markup called Yield Spread Premium (YSP) by fat cat insiders. YSP is simply a reward paid to loan originators for locking and closing your home loan with a higher than necessary mortgage rate. Notice I say “higher than necessary.” The lender behind your loan approves you for a specific rate known as a par mortgage rate. The person arranging your loan then quotes you a higher rate based on what they think you’ll agree to pay much like a used car salesman. Avoid this markup of you’ve got yourself a par or wholesale mortgage rate.

How do Mortgage Brokers Get Paid?

Brokers get paid for their work in two ways. There is the loan origination fee you pay at closing for this person’s services when home loan refinancing. One percent is a perfectly reasonable amount to pay for loan origination; however, many brokers routinely charge as much as 2.5% or more. Then there is the Yield Spread Premium fee. Your broker can receive as much as one percent of your home loan refinancing amount for every .25% they jack up your interest rate. In the case of a broker this fee is disclosed on your HUD-1 statement; however, most brokers cleverly explain the fee away since it’s not coming out of your pocket directly. Indirectly they’re stealing as much as $1200 a year or more from your bottom line.

How can you avoid this unnecessary markup of your mortgage rate? Check out my free mortgage videos and see how easy it is to keep more cash in your pocket after paying your home loan.

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Here’s a quick taste to get you started. My underground home loan refinancing videos are free and will only take about 45 minutes of your time…register today, it’s quick and easy.

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.

Origination Fee and Points

refinance rates online Origination Fee and Points
Many homeowners absolutely dread refinancing their mortgage loans because they don’t fully understand how the loan origination Fee and discount points work.

In fact, the loan origination fee and unnecessary discount points are one of the reasons homeowners in the United States will overpay well over sixteen billion dollars this year alone when refinancing their mortgage loans according to the HUD Secretary. Here are several tips to help you avoid being a part of this statistic when refinancing your home loan AND save you thousands of dollars in the process.

Your Loan Origination Fee Can Make or Break Your Deal

Let’s get started with the loan origination fee. Sometimes called “origination points” this a fee you will pay to the person arranging your new loan. This person could be a discount mortgage company or a broker. A reasonable amount to pay for loan origination is one percent of your loan amount; however, it is not uncommon for mortgage brokers to charge as much as five percent. If you follow the system outlined in the free underground mortgage videos on this website you can find a loan broker willing to work for one percent without padding your best mortgage rate for a commission…but more on that later.

What About Discount Points?

There is another flavor of mortgage points you need to be aware of and that is the so called “discount points.” This is a form of pre-paid interest paid by you at closing in exchange for the lowest mortgage rate. One “discount” point is the equivalent of one percent of your mortgage amount and should lower your mortgage rate by .25%. Some lenders will require you to pay points to get a specific low mortgage rate; however, in today’s market you can get rock bottom rates without paying discount points.

If you have less than desirable credit you might not be able to get around paying points…whether or not it makes sense to refinance in your case depends on how long it will take to recoup your points and closing costs from your savings on the new loan. You can easily calculate the break-even point when refinancing by determining how much lower your new monthly payment will be each month and dividing your total closing costs including points by the amount of your savings. This will tell you how many months it will take to recoup your expenses from refinancing; if you can live with the length of time it takes to get your money back then refinancing your home loan probably makes sense in your situation.

This is a much more intelligent method of determining if refinancing is a good idea in your situation than relying on that old wife’s tale known as the two percent rule. (The two percent rule states you should only refinance if the best mortgage rate is two percent lower than you existing rate. A real bonehead came up with this rule…you’d never want to be seen with him and he’d embarrass you at parties.) Getting back to points in most cases you will want to avoid paying discount points whenever possible because mortgage rates are so low right now.

What About Mortgage Broker Markup?

That’s the million dollar question…what about all these sneaky mortgage brokers that mark your interest rate up to get a commission from the lender? I’ll bet you didn’t know they did that? In fact, many brokers become defensive and angry if you ask them about this markup, insisting that the fee they receive from the lender is “none of your business…it’s between me and the lender.”

Well, I’m here to tell you that this “fee” known as Yield Spread Premium is your business and you should be very concerned as to why the lender pays the broker for marking up your mortgage rate. Mortgage lenders love loans that close with higher than market mortgage rates. Your online mortgage lender actually makes the majority of their profits selling loans to investors on the secondary mortgage market and home loans with higher than necessary mortgage rates make them the most profit. This is why mortgage lenders reward brokers that overcharge their customers with a commission known as Yield Spread Premium.

Most homeowners have never heard of this markup and don’t know how to spot it in their loan documents. You’ll probably never see it on your Good Faith Estimate because many brokers leave it off completely. The lender is required by law to disclose it in the HUD-1 statement; however, if you don’t know what you’re looking for at this point it’s probably too late and you’ve already paid too much.

Better luck next time around right? Well, fortunately for you, you’re probably not that far along in the closing process and have time to learn how to avoid this unnecessary markup of your discount mortgage rate that results in overpaying thousands of dollars every year that you keep the mortgage loan. Another little known fact when refinancing your home mortgage loan is that you actually have three days to change your mind and put the brakes on before your lender funds the loan. This is known as your three day rescission rights…you can bail on a shady lender at any time until your loan is funded three business days after closing.

How to Avoid Overpaying the Loan Origination Fee

You might be thinking to yourself I know how to avoid all this on line mortgage broker trickery… I’ll just refinance my home loan with my bank or credit union. Guess again, banks have their own tricks due to a little known loophole in the Real Estate Settlement Procedures Act. Refinance your home loan with a bank and I guarantee you’ll pay more than you have to AND will never know how the bank overcharged you. The best deals when refinancing your mortgage without overpaying come from finding the right mortgage broker for the job.

Your Mortgage broker works for a commission, you’ll never get around this and they do have kids to feed like everyone else; however, they should not be taking advantage of people just to make a hummer payment. There are honest mortgage brokers out there who are willing to work for a one percent loan origination fee without taking Yield Spread Premium on the loan; you just need to know how to find them.

Click for Instant Online Access

Check out my free Underground Mortgage Refinancing Videos and you’ll discover how easy it is to save thousands of dollars getting the best refinance rates without paying unnecessary markup or lender junk fees.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Free Underground Mortgage Videos

Here’s a sample to get you started paying less for the loan origination fee from today’s best mortgage lenders

Mortgage Rate Lock Mistakes

If you are shopping for mortgage rates you might be wondering if and when you should lock your mortgage rate. Lock at the wrong time and you risk mortgage rates going down.

Lock for too short a period of time and you might not have time to close on the mortgage before the lock expires. Here are the basics you need to know about mortgage rate lock to avoid common mistakes when refinancing your loan.

A common misconception for many homeowners is that if you lock your rate and mortgage rates go down, your rate will also drop to the new level. Unless it’s in your contract this simply isn’t true. Many people think you should lock your mortgage rate as soon as possible and then if rates go down you can “relock” to the lower mortgage rate. Once you lock your mortgage rate in writing, your rate is locked…period.

Always Lock Your Mortgage Rate in Writing

When you decide to lock your mortgage rate you must tell your broker to execute the mortgage rate lock and get the confirmation agreement in writing. If you don’t have it in writing you never locked you mortgage rate. Next, make sure the proof you get from your mortgage broker is actual proof from the lender. The mortgage broker will receive a faxed confirmation, although it could be emailed or a online form from the wholesale lender that details the terms of your rate lock. This document will include the type of mortgage, interest rate, points, and most importantly when the lock expires.

Make Sure Your Written Rate Lock Confirmation Comes from the Lender and NOT The Mortgage Broker…

Dishonest mortgage brokers will try and trick you by passing off a bogus Mortgage Rate Lock typed up on their own letterhead. If you get something like this you have probably not locked your rate or they are simply hiding their markup of your mortgage interest rate. Either way, do not accept any rate lock confirmation that does not come directly from the lender.

How Long Should I Lock My Mortgage Rate?

If your mortgage rate lock expires before you have a chance to close on your loan the lender does not have to honor the rate you were promised and will probably raise it. Once your rate lock expires it is not in the lender’s interest to give you the lowest rate since they have already hedged funds for your loan.

Suppose for instance you lock your mortgage rate for 30 days at 5.5%. You miss your closing date and the rates while you were locked when up to 6.25%. This means you’ll be stuck with a rate of 6.25% because the lender will always give you the higher rate. Even if rates go down you’ll be stuck with your old rate because it is the higher of the two.

Should You Float Your Mortgage Rate?

Floating your mortgage rate means you choose not to lock. There is no obligation on your part or the lenders to commit to a specific mortgage rate. If rates are going down you’ll be in a good position to catch the lower rate; however, if mortgage rates are on the rise you have no protection from the market. Floating your mortgage rate is a risk you take…you might come out ahead but you might lose big.

Watch Out For Yield Spread Premium

The lender’s rate lock confirmation is the first opportunity you’ll have to catch Yield Spread Premium (YSP) on your loan. If you’re not already familiar with YSP this is the mortgage broker’s markup of your interest rate for a commission. If you want the lowest possible mortgage rate when refinancing you’ll need to ensure your loan does not include this markup.

You can learn more about avoiding Yield Spread Premium when locking your mortgage rate by checking out my free Underground Mortgage Videos on this website.

Can I Refinance My Mortgage If My Home Is Underwater or Upside Down?

When the Real Estate bubble burst many homeowners particularly in parts of the country like California and Florida saw their property values plummet. If you were one of these homeowners you may have gone from having as much as $50,000 in equity to being under water.

The burning question for homeowners who find themselves in this situation is “Can I refinance when I owe more on my existing mortgage than my home is currently worth?” Here are several tips to help you answer this question for yourself.

When you are upside down or underwater with your mortgage loan as the terms suggest, you owe more than your home is worth. Some online lenders will tell you that you’re underwater even if you have not had a recent appraisal of your home’s value based solely on the geographic location of your property.

If the last appraisal of your home valued the property at $350,000 but your lender is telling you it’s now worth $260,000 you can still easily refinance if your mortgage is less than $200,000. The problem comes when you owe more than the property is worth, meaning you have “negative equity” in your home.

The straight answer to the question of mortgage refinancing when you’re underwater is possibly; however, there may be other options available to you. This may not be the answer you want to hear and for this I apologize but it is important to know your options when you are upside down in your mortgage loan. 100% mortgage loans are no longer available in today’s marketplace so unless you have the cash on hand to pay your mortgage down below the value of your home refinancing could be a difficult option.

If you don’t have the cash on hand there are ways to get it. Hard money lenders are one such method. A “hard money lender” is a private investor lending money to homeowners who are either upside down in their homes or are facing foreclosure. You have to be careful when dealing with private investors and observe the rule of “buyers beware” as there may be very little regulation of hard money lenders in your State.

Click for Instant Online Access

Check out my free Underground Mortgage Refinancing Videos and you’ll discover how easy it is to save thousands of dollars getting the best refinance rates without paying unnecessary markup or lender junk fees.

httpv://www.youtube.com/watch?v=be9md0A0_2c
  • Free Underground Mortgage Videos

Here’s a sample to get you quickly on the path to mortgage bliss.