Mortgage Refinancing: Beware the Mortgage Vultures

by Louie Latour - Date: 2006-12-01 - Word Count: 356 Share This!

If you are in the process of mortgage refinancing you need to be wary of overpaying for your loan. Mortgage vultures overcharge you and even structure their loans to promote foreclosure so they can take your home. Predatory lending practices are common in the United States; however, if you take the time to do your homework and research mortgage offers, abusive lenders are easy to spot. Here are several tips to help you avoid the vultures when mortgage refinancing.

Mortgage vultures are any company or broker that takes advantage of you when mortgage refinancing. This describes the industry as a whole, because wholesale lenders encourage retailers to mark up you interest rate unnecessarily. Mortgage companies and brokers have a subtle way of disguising the way they overcharge you. What happens when you apply for mortgage refinancing is the wholesale lender qualifies you for an interest rate and provides your mortgage company or broker with a written guarantee of the interest rate.

Your mortgage company marks up the interest rate and gives you a separate written guarantee. If you agree to the terms and take out the loan, you are paying more than you should for that mortgage. Mortgage companies and brokers mark up your interest rate because the wholesale lender pays them one point, or one percent of your loan amount, for each .25% they get you to overpay for mortgage refinancing. The mortgage company will never tell you they've done this, and if you do not know what to look for you'll never see it in the Good Faith Estimate or HUD-1 statement.

This unnecessary markup of your mortgage interest rate is called Yield Spread Premium and results in homeowners in the United States overpaying $16 billion dollars in unnecessary interest every year. Because you are already paying origination fees for mortgage refinancing, any retail markup you pay is money wasted on junk fees. How can you avoid paying retail markup of your interest rate when mortgage refinancing? Homeowners that learn to recognize Yield Spread Premium can avoid paying it.

You can learn more about mortgage refinancing including costly mistakes to avoid by registering for a free mortgage tutorial.

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Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit

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