Yield Spread Premium: What You Need to Know to Avoid Overpaying for Your Next Mortgage Loan
Never heard of Yield Spread Premium? Youre not alone; the majority of homeowners in the United States pay this unnecessary markup of their mortgage interest rate and never even know it. Here are several tips to help you avoid paying Yield Spread Premium and other costly mistakes when taking out your next mortgage loan.
What is Yield Spread Premium?
Yield Spread Premium is the retail markup of your mortgage interest rate by your Mortgage Company or broker. Mortgage loans are commodity products just like cars; just like the car dealership, your mortgage company tries to make additional profit by overcharging you for the loan. Heres an example of Yield Spread Premium in action when refinancing your mortgage loan.
Your mortgage company tells you that youve qualified for 6.75% mortgage loan for $250,000. They charge 1.5% in origination fees and a $400 processing fee; these are all fair charges in line with what you can reasonably expect to pay for mortgage refinancing. What the mortgage company isnt telling you is that you actually qualified for a 6.0% mortgage with the wholesale mortgage lender. The wholesale mortgage lender provided a written guarantee of this interest rate to your mortgage company. Your mortgage company marked up the interest rate to 6.57% because they wholesale lender pays them one point for each .25% they overcharge you.
Yield Spread Premium Results in Overypaying Thousands of Dollars
This retail markup of the mortgage interest rate is Yield Spread Premium. Your deceptive mortgage company received $7,500 for overcharging you on top of the $3,750 you paid for the loan origination. The additional .75% you agreed to pay amounts to thousands of dollars in unnecessary interest payments, and thats just in the early years of the loan! How can you avoid paying Yield Spread Premium when mortgage refinancing? You can learn how to avoid paying Yield Spread Premium and other costly mortgage mistakes by registering for a free mortgage tutorial.
To get your free mortgage tutorial 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
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