The Unique Real Estate Blog

Shopping for the best mortgage offer will help you find the best deal if you go about it correctly. Many homeowners simply end up with the best of the worst mortgage loans because they don’t negotiate for the interest rate they deserve. Mortgage loans are wholesale products and if you’re not careful the “middleman” will markup up your interest rate; here are several tips to help you avoid paying retail markup when refinancing your home loan.

Many homeowners don’t realize that mortgage loans are retail products just like kitchen appliances; just like kitchen appliances there is a wholesaler and a retailer that marks up the loan for a profit. How can you cut the middleman out when refinancing your mortgage? Homeowners who understand how mortgage rates are marked up by their loan originator can negotiate to avoid paying this markup.

You’re already paying origination fees to your mortgage company or broker for their part in arranging your loan; if you accept a retail mortgage rate when refinancing you’re actually paying double, even triple for your new loan. So what is this retail markup? It’s called Yield Spread Premium and here’s an example of how it works.

Suppose you’re refinancing your mortgage for $300,000 at 6.75%. Your mortgage company charges you one percent, or $3,000 for the loan. One percent is a reasonable fee to pay; however, what the mortgage company isn’t telling you is that the wholesale lender behind your loan approved you at 6.25%. Your mortgage company marked up your rate because the lender pays them an additional one percent of your loan amount for every .25% you agree to overpay. This mortgage company receives $6,000 from the lender on top of the $3,000 you paid, and you get stuck paying too much mortgage interest.

The good news is that if you learn how to recognize this markup you can avoid paying it. As you can see, proper comparison shopping requires negotiation; not simply comparing apples to apples with the mortgage quotes you receive. You can learn more about refinancing your mortgage while avoiding costly mistakes with a free mortgage tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: “Mortgage Refinancing - What You Need to Know,” which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.

Get your free mortgage refinancing tutorial today at: www.refiadvisor.com