Florida Mortgage Refinancing
If you are in the process of refinancing your home loan and want the best mortgage rates there are several things you need to know about Florida mortgage rate quotes. The quotes you find on the Internet and from your mortgage broker include markup that could raise your payment by hundreds of dollars. Here are several tips to help you get the best rate when refinancing without paying too much to the mortgage company or broker.
Beware Yield Spread Premium
When your mortgage broker locks and closes your home loan with higher than market interest rates the spread created is called Yield Spread Premium. The broker inflates your mortgage rate to get this commission from the lender at your expense.
An Example of Yield Spread Premium
Suppose you’re refinancing your home loan for $350,000 with a mortgage rate of 6.5%. The broker charges you a 1% fee for arranging you loan meaning you’ll have to pay this person $3500 at closing. What your broker isn’t telling you is that you actually qualified for a 6.0% mortgage rate and they’ve marked it up because the lender is paying them 2% or $7000 for overcharging you. You get stuck with a higher than market mortgage rate meaning you’ll pay thousands of dollars in finance charges unnecessarily.
What Does This Do To Your Payments?
Suppose you refinance your home with a fixed rate mortgage with a 30 year term length. The mortgage your broker told you that you qualified for at 6.5 percent would give you payment of $2,200 per month. If you got the mortgage you qualified for at 6.0% your payment would only be $2,090. That’s a savings of $1,320 per year all because your mortgage broker took advantage of your situation!
It is possible for homeowners who understand Yield Spread Premium to avoid this unnecessary markup and refinance with a wholesale mortgage rate. When you do this it is only necessary to pay a one percent origination fee to the broker. You can do this for yourself by investing a few hours doing your homework and can save yourself thousands of dollars in the process.