Mortgage Refinance Information: Tips You Need to Know

If you are like most homeowners seeking mortgage refinance information online you’re already familiar with discount points and how they affect your mortgage rates.

What you may not know is that the mortgage industry has a little known dirty secret called Yield Spread Premium.

Simply put, Yield Spread Premium is the opposite of a discount point. Someone… just not you… is getting cash from the lender for marking up your mortgage interest rate. Here are the basics you need to know to avoid paying too much when refinancing your home mortgage loan.

Mortgage Refinancing & Yield Spread Premium

It sounds like a scary term but Yield Spread Premium is a relatively simple concept to wrap your head around. The majority of homeowners today have never heard of Yield Spread Premium nor do they know that this markup of their mortgage rate was quietly slipped into their existing home loan. According to the government Yield Spread Premium is responsible for American homeowners overpaying nearly sixteen billion dollars this year alone.

How Yield Spread Premium Works

Here’s an example: suppose you are refinancing your mortgage for $250,000 and your mortgage broker tells you that you qualify for a mortgage rate of 6.5 percent. What you don’t know is that you actually qualify for a mortgage rate of 6.0%. The “spread” is the difference between what you got and what you could have had…in this example .5%.

The premium created in this example is a 2% commission for the mortgage broker for lying to you. In this example the mortgage broker walked away with a $5,000 payday from the mortgage lender for overcharging you. This is in addition to any fees you paid to the broker for loan origination. 99.99% of homeowners have mortgage loans with higher than necessary mortgage rates. Most likely you’re already paying thousands of dollars too much for your existing mortgage loan.

Yield Spread Premium Can Be Avoided

You can refinance your existing home loan without this unnecessary markup of your mortgage rate. Homeowners who learn to recognize and avoid Yield Spread Premium are able to take advantage of the wholesale nature of mortgage rates and save thousands of dollars every year pay a mortgage. The free online videos available on this website will show you an easy-to-follow method of refinancing your mortgage without this markup of your interest rate and how to avoid lender junk fees.

Check out my Underground Mortgage Videos and you’ll also receive a list of mortgage brokers in your area that don’t mark up mortgage rates to get you on the right track to refinancing without paying too much for your next mortgage loan.

Great Mortgage Refinancing for Dummies

lowest mortgage rate Great Mortgage Refinancing for Dummies

Refinancing your home loan allows you to take advantage of low mortgage rates as well as change the terms of your existing mortgage loan.

Before you decide to refinance your existing mortgage it is important to determine how long it will take you to recoup the expenses of refinancing your home loan. Here are several tips to help you decide if mortgage refinancing is right for you.

Mortgage Refinancing for Dummies

The process of refinancing is simply taking the balance you owe on your existing mortgage and paying it off with a new mortgage. You may have the opportunity to borrow against your home’s existing equity and get cash back in the process. Keep in mind that there are fees that you will be required to pay and there could be a penalty for paying off your existing loan early. You should examine your existing mortgage contract for a prepayment penalty prior to applying for a new mortgage loan.

Closing costs are the fees you will be required to pay when refinancing and you will encounter many of the same fees you paid when you first purchased your home. There are banks boasting about their “no fee, no closing cost” mortgage loans; however, you should know that you are trading a higher mortgage rate which will drive up your payment amount for these closing costs.

What About Mortgage Points?

Paying “discount” points on your new mortgage allows you a way to buy down your mortgage rate. One point is the equivalent of one percent of your mortgage amount paid at closing. Suppose for instance you are required to pay two points on a $150,000 mortgage, this means you will have to fork over $4,500 at closing to get the interest rate promised to you. Should you pay discount points when refinancing? In most cases no. Mortgage rates are at historically low levels and for most homeowners it doesn’t make sense paying for a mortgage rate that another lender would be willing to give you.

Types and Term Length of Mortgage Loans

Refinancing your home loan gives you the opportunity to change the term length and type of mortgage rate for your loan. Mortgage rates come in three basic varieties: fixed, adjustable, and hybrid. Hybrid mortgage loans are a combination of fixed and adjustable rate mortgages and are best suited for homeowners who only plan on keeping their homes for a short while and want to minimize their risk of payment shock from an Adjustable Rate Mortgage.

Refinancing your existing mortgage means choosing the right type of interest rate, term length, and loan originator for the new loan. Most homeowners overlook the importance of choosing the right person to arrange the new loan as this person sets their fee and commission based markup of your mortgage rate. Choosing the right mortgage broker will make or break your new home loan and could save you thousands of dollars every year you keep the loan.

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You can learn more about paying less for your next home loan by checking out my free Underground Mortgage Videos.

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Here’s a quick sample to help you pay less at closing for current mortgage rates

Best Mortgage Rates

If you’re considering mortgage refinancing you’re probably on the Internet searching for the best mortgage rates and wondering where to find them. What makes a mortgage rate good? It’s the lowest one out there right?

home loan Best Mortgage RatesFinding the lowest rate and getting the lowest mortgage rates are two entirely different things. Here are several tips to help you get the best mortgage rates and save thousands of dollars in the process.

Finding the Best Mortgage Rates

The Internet is an excellent tool for comparing mortgage rates; however, most homeowners shopping for a mortgage on the Internet today are simply comparing the best of the worst mortgage rates available. Why is this?

The mortgage rate quotes you receive online almost always include commission based markup. This commission is a fee paid by the lender to your mortgage broker for the sole purpose of marking up your mortgage rate. Want the best mortgage rates available when refinancing? You’ll have to find a broker willing to work for you for a flat origination fee instead of marking up your mortgage rate.

How to Refinance With the Best Mortgage Rates

Finding the lowest mortgage rate when refinancing is easier than you think; you’re not actually shopping for a rate quote when refinancing, you’re looking for the right person to arrange your loan. The ideal mortgage broker for the job will be self-employed, even working out of their home. Are you crazy? Trust my mortgage loan to a home-bound shut in of a mortgage broker without a posh office or expensive sales staff? Oh wait a minute…you might be on to something here…

That’s right…the ideal mortgage broker working out of their home is going to be much more willing to negotiate with you over fees and their commission…one that will not include marking up your mortgage rate for a commission. If you follow the system outlined in the free mortgage videos on this website you’ll be able to refinance your home paying a flat origination fee of one percent and no junk fees.

Mortgage Yield Spread

So what is this commission based markup and how does it work? Simply put, your broker can receive a commission from the lender for locking and closing your loan with a higher than market mortgage rate. This percentage of your loan amounted created when you agree to pay more than necessary is called Yield Spread Premium and avoiding it needs to be the number one priority when refinancing your home loan. Register for the fee mortgage video guide on this website today and you’ll be on the path to saving thousands of dollars every year that you have a mortgage loan.

Mortgage Refinance Secrets

eloan Mortgage Refinance SecretsIf you are in the process or are considering a mortgage refinance, there are several things you need to know to avoid paying too much for your next home loan. Refinancing can lower your mortgage rate and monthly payment saving you money for other things.

In order to refinance your home loan without overpaying and getting the lowest possible rate there are number of things you need to know that are commonly overlooked by most homeowners. Here are several Mortgage Refinance Secrets that can save you thousands of dollars on your next home loan.

Mortgage Basics: Paying Points

Mortgage Points are a fee you pay upfront when taking out a new loan or refinancing your existing mortgage. Points come in two varieties: there are “discount” points you pay the lender in exchange for lowering your mortgage rate and the origination points you pay to the person arranging your loan. The decision to pay discount points should be made considering how long you plan on staying in your home and how long it will take you to recoup this expense. Mortgage rates are currently at historically low levels…most homeowners should think long and hard before agreeing to pay discount points, and then only there are no other options.

What About Mortgage Origination Fees?

Mortgage origination points are entirely different and bring about their own problems. This fee is frequently abused and can range anywhere from zero to as much as five percent. If you follow the RefiAdvisor system when refinancing your mortgage you will be able to refinance paying only a flat one percent origination fee to the broker. This means there will be no markup of your mortgage rate for a commission which results in a higher monthly payment for as long as you keep the loan.

Choosing The Right Loan Term Length

Term length is the amount of time you have to repay your mortgage and along with mortgage rate determines how much your monthly payment will be. Term lengths range from one to forty years; however, the most common choices are fifteen year mortgages when refinancing and thirty years for purchase loans. Each type of term length has its advantages. If you need the lowest mortgage payment possible choose a loan with a longer term length. If your goal is to restore equity in your home as quickly as possible after refinancing, choosing a mortgage term length of fifteen years could help you accomplish this goal.

Choosing The Right Mortgage Rate Type

One of the most important decisions you will need to make when refinancing your home loan is which type of mortgage rate to choose. Mortgage rates come in the fixed variety which gives you a monthly payment amount that will not change for the duration of your loan and the Adjustable Rate Mortgage which will change at regular intervals over the course of your loan. Adjustable Rate Mortgages typically come with lower rates than fixed rate loans; however, you run the risk of payment shock when rates go up and the lender adjusts your loan.

Mortgage Secrets: Yield Spread Premium

You may be reading this article saying to yourself “this is pretty basic stuff…where are the secrets?” Here’s one secret few homeowners know about…and it’s a big one. I’m talking about Yield Spread Premium and it is considered by many to be the mortgage industry’s dirty little secret.

Yield Spread Premium is a percentage of your mortgage amount created when the person arranging your loan locks and closes with a higher than necessary mortgage rate. I say higher than necessary because the lender approved you for a lower mortgage rate except the person arranging your loan has marked it up to get a commission from the lender. You should note that this commission is paid in addition to any origination points you are already paying for this person’s services and this markup is almost always done without your knowledge or consent.

Yield Spread Premium Example

Here’s a common example to illustrate how Yield Spread Premium drives up your monthly mortgage payment unnecessarily. Suppose you are refinancing your existing home loan for $325,000. Your mortgage broker tells you that based on your credit and qualifying ratios that you qualify for a mortgage rate of 6.75% and charges you a loan origination fee of 3% or in this example $9,750. First of all, if you registered for the free videos on this website you know that 3% is highway robbery and you can refinance paying 1% to the broker or $3,250; however, in this example we’ll assume you passed up the opportunity to watch these free videos and the origination fee is going to cost you almost $10,000.

Your monthly payment at 6.75% on a thirty year fixed-rate mortgage will be $2,100. What your mortgage broker isn’t telling you is that you actually qualify for a 6.0% mortgage rate that would have given you a monthly payment of $1,940. That’s a difference of $160 per month or $1,920 that you’re overpaying each and every year that you keep this loan. What’s in it for the mortgage broker to overcharge you? For every .25% that your broker marks up your mortgage rate the lender pays them 1.0% of your loan amount. In this example the broker walked away with an additional $9,750 from the lender on top of what you’re already overpaying. Your mortgage broker banked $19,500 refinancing your home loan and of course lying to you about the mortgage rate.

That’s horrible! Are mortgage brokers really this bad? Worse than used a car salesmen? YES! Well, not all of them. Your job when refinancing your home loan is to find the right mortgage broker willing to refinance your home loan for a flat origination fee without including Yield Spread Premium on your loan. You can learn how to do this for yourself with an easy-to-follow system that offers proven results by registering for the free videos on this website.

Fixed Rate versus Adjustable Rate Mortgage Loan When Refinancing

mortgage rates Fixed Rate versus Adjustable Rate Mortgage Loan When RefinancingMany homeowners favor fixed rate mortgage loans because they need a monthly payment that will not change over the life of their loan. While it’s true that Adjustable Rate Mortgages are typically lower there is the risk of payment shock. Here are several tips to help you choose the right mortgage while minimizing your risk.

How to Choose The Right Mortgage Loan

The decision when choosing the type of mortgage for your home can be easily made based on the amount of time you will be staying in your home. When the economy is bad choosing a Fixed Rate Mortgage is a safe bet that can hedge you from economic uncertainty.

Mortgage rates are nearly impossible to predict and no one can say with any degree of certainty what they will be in several years. If you only plan on keeping your home for five to seven years you could benefit from the lower rates offered by Adjustable Rate Mortgage loans.

Here are some of the benefits of fixed mortgage loans versus adjustable rate mortgage loans.

Fixed Rate Mortgage Loans:

• Predictable mortgage payments
• Fixed interest rates are still at historically low levels
• Won’t have to refinance when rates go up
• Fixed Mortgage Rates are nearly at the same levels as Adjustable Rate Loans

Adjustable Rate Mortgage Loans:

• Mortgage Rates are just lower than fixed rate loans
• Hybrid loans have fixed rate periods lasting as long as seven years
• Some loans offer ultra-low introductory rates
• Ideal for homeowners only planning to stay for a short while

There are other reasons for choosing one type of loan over another but the safest bet is to base your decision on the amount of time you will be keeping your home. If you are only going to be with your home for the short term, you cans save yourself some money by choosing an Adjustable Rate Mortgage loan.

You can learn more about your options when refinancing, including costly mistakes to avoid by registering for the free refinancing videos on this website.