Mortgage Broker Refinancing - There is no Such Thing as a Good Mortgage Broker
Mortgage Brokers are simply retail vendors for wholesale mortgage companies. Your Mortgage Broker is compensated by the origination fees you pay for the new loan. Origination fees run around 1-1.5% of your loan amount and are more than ample compensation for your Mortgage Broker's services; however, Mortgage brokers mark up your mortgage interest rate to boost their profits.
The retail markup of your mortgage interest rate is called Yield Spread Premium. Your Mortgage Broker has absolutely nothing to do with qualifying you for an interest rate, although this person will claim they are getting you a fantastic deal. The interest rate you qualify is set by the wholesale lender. After evaluating the details of your application and your credit, the wholesale lender provides your Mortgage Broker with a written guarantee of that interest rate. Your Mortgage Broker turns around and gives you a separate written guarantee for a higher interest rate, all the while telling you what a great deal you are getting.
The more your Mortgage Broker marks up the interest rate, the more they are paid by the wholesale lender. Here is an example of Yield Spread Premium in action. Suppose your Mortgage Broker tells you that you've qualified for an interest rate of 6.75 when refinancing for $225,000. What your Mortgage Broker isn't telling you is that the wholesale mortgage lender qualified you for an interest rate of 6.25%. The additional .25% is going to cost you thousands of dollars in unnecessary interest, all because your Mortgage Broker lied to you.
Mortgage Brokers mark up mortgage interest rates because the wholesale lender pays them a bonus of one point for every .25% they get you to overpay. In the previous example, your Mortgage Broker received $4,500 on top of your origination fees of $3,375. Can you see how paying retail markup results in paying double for your new mortgage? How can you avoid paying Yield Spread Premium to your Mortgage Broker?
Ask to see the interest rate guarantee from the wholesale lender. Tell your Mortgage Broker that you will pay 1-1.5% in origination fees and reasonable closing costs but will not pay Yield Spread Premium. If your Mortgage Broker refuses to show you the guarantee, find another broker. You can learn more about mortgage refinancing, including costly mistakes to avoid by registering for a free mortgage tutorial.
Related Tags: refi home loan, mortgage refinancing, mortgage broker, refinancing information
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
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 Refiadvisor.com.
Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com
Recent articles in this category:
- Understand The Fha Guidelines Before Considering Fha Mortgage
The U.S. economy was hit hard by the global financial meltdown. In the housing sector, the crisis is
- Basic Facts About Multifamily Apartment Construction Loans
When you make an investment, you surely think of getting something out of it to make the deal profit
- Commercial Mortgage Refinance Loan - Ideal Solution For Financial Problems
Financial security is something which we have to plan from before. In life, there is no certainty wh
- Free Government Grant Money Eligibility Requirements
All of us hear about free government grant money. But what is involved in obtaining this money? What
- Top 10 Tips On Buy To Let Mortgages And Property Hunting
If you are looking for an opportunity to invest your savings or any money you have come into, there
- A Few Tips On How To Stop Foreclosure
In case you are facing certain financial catastrophe caused by a loss or relocation of a job, or wha
- How To Stop Foreclosure And Lose Your Residence To The Bank
In today's market, there are more and more citizens that get big loans then they use their home as a
- Most Excellent Way To Stop Foreclosure - The #1 Blueprint For Saving Your Home
Just what is the best measure to stop foreclosure? No doubt you are browsing for an answer to that q
- Act Fast To Stop Foreclosure
If you would like to find out how you can put a stop to foreclosure, there is not much to accomplish
- Tips For Buying A Home With No Money
There is a popular belief that you can only buy a home if you have great credit. This is false becau
Most viewed articles in this category:
- Mortgage Refinancing - Rate Caps Protect You When Refinancing With an Adjustable Rate Mortgage
Adjustable Rate Mortgages can save you money when mortgage refinancing if you fully understand how t
- 100% Mortgage Loans: What You Need to Know
Coming up with a 20% down payment can be a difficult task for many potential homebuyers. If you are
- Home Equity Loan Pitfalls
The home equity loan came of age in 1996 when changes in the tax law eliminated deductions for the i
- Mortgage Refinancing: How the Fannie Mae Weekly Yield can Help You Comparison Shop
Mortgage refinancing without knowing Fannie Mae's weekly yield is like buying a used car without kno
- How to Pay Off Your Mortgage in 7 Years, Without Extra Payments
One of the most exciting new topics concerning wealth is “How to Pay Off Your Mortgage in
- Mortgage Rate Comparison
Trying to get an "apples to apples" mortgage rate comparison can often be quite a hassle. Traditiona
- Should I Pay Off My Mortgage Early?
Many people think that real estate debt is good debt. They think that their mortgage is their bigges
- Mortgage Refinancing: Beware the Mortgage Vultures
If you are in the process of mortgage refinancing you need to be wary of overpaying for your loan.
- Mortage Loans - How Much Does It Actually Cost In The End
Mortgage loans are the loans used to finance most people's first home. It is the big loan that ever
- Where To Locate Home Improvement Loan Companies
Where to locate home improvement companies is a question that arises from many different people. Som