The mortgage industry’s best kept secret is that your interest rate is marked up to give the person originating your mortgage a commission. This markup of your mortgage rate is what makes mortgage loans retail. Here are several tips to help refinance your mortgage with a wholesale interest rate.
The mortgage industry is made up of several types of lenders. There are wholesale lenders, banks, and correspondent lenders also called broker-banks. Because you should never refinance your mortgage with a bank or correspondent lender due to a loophole in the Real Estate Settlement Procedure Act, the best deals come from wholesale lenders.
Can the average homeowner get a wholesale rate directly from the source? Unfortunately, members of the public cannot get wholesale rates. Even If you contact a wholesale lender directly you’ll be dealing with that lender’s retail branch. Because individual homeowners cannot get wholesale rates directly we have to rely on a third party to access wholesale mortgage rates. These individuals are mortgage brokers.
You have to be careful when working with a mortgage broker because they make their money by commission; the mortgage that gives your broker the biggest commission is not going to be the best mortgage loan for you. You can refinance your mortgage with a wholesale mortgage rate and pay your broker a reasonable amount without overpaying. Where most homeowners overpay without realizing is the markup of their mortgage interest rate known as Yield Spread Premium.
What is the Yield Spread Premium?
Yield Spread Premium is simply the difference between the mortgage rate your lender approves you and the one you close with after your loan originator’s markup. According to the HUD Secretary, homeowners in the United Sates overpay almost sixteen billion dollars annually because of Yield Spread Premium. Fortunately, homeowners that learn to recognize the unnecessary markup of their mortgage interest rate can avoid overpaying.
Continue Reading This Article Here: Wholesale Mortgage Rate
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About the Author
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com |
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