Florida Mortgage Refinancing
If you’re considering refinancing your Florida mortgage loan and want the lowest possible rate there are several things you need to know about mortgage rate quotes. The quotes you find when comparison shopping all include commission based markup of the rate that raises your mortgage payment by hundreds of dollars. Here are the basics you need to know in order to avoid this unnecessary markup when refinancing your home.
Beware Yield Spread Premium
The markup of your mortgage rate for a commission is known as Yield Spread Premium. It is simply a percent of your mortgage that is created when you lock and close your loan with above market rates. This percentage is paid to your mortgage company or broker as an incentive for overcharging you.
Yield Spread Premium in Action
Imagine you’re refinancing your home and your existing mortgage is for $350,000. Your mortgage broker quotes you a rate of 6.5%. You agree to pay a one percent origination fee for the broker’s services meaning you have to come up with $3500 at closing. What your mortgage broker hasn’t told you is that you actually qualified for a 6% mortgage rate and they’ve marked it up for a commission. You get stuck paying too much for your mortgage loan and your broker walks away with an extra $7000 from your lender.
What Does This Do To Your Payments?
If you refinanced your home with a fixed rate mortgage for 30 years at six and a half percent your mortgage payment would be around $2200. The same loan at six percent interest has a payment of around $2090. That’s a difference of $1320 per year that you’re losing every year because the broker took advantage of you!
Fortunately for you it is possible to avoid this commission based markup of your mortgage rate and keep more of your own money. You can qualify for wholesale mortgage rates and pay a flat one percent fee to the broker. All it takes is investing a few hours time doing your homework and you’ll save yourself thousands of dollars in unnecessary fees and interest.
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