Louie Latour asked:




If you are in the market for a new mortgage loan, careful comparison shopping can save you thousands of dollars if you go about it correctly. Many financial advisors will tell you to use the Annual Percentage Rate, or APR when comparison shopping; however, the APR simply does not give you enough information to make an informed decision as to which loan is best. Here are several tips to help you comparison shop using the Good Faith Estimate.

The Good Faith Estimate is a government regulated document that outlines estimated costs for the mortgage refinancing offers you consider. All of the expenses found on your mortgage refinancing Good Faith Estimate outline the anticipated origination fees, points, escrow fees, appraisal fees, title fees and insurance expenses for your loan. Mortgage lenders are required to provide you the good Faith Estimate along with a Truth in Lending statement within three days of receipt of your application for mortgage refinancing; however this doesn’t help with actual comparison shopping.

The good news is that most mortgage companies and brokers will give you a copy of the Good Faith Estimate simply by requesting one. This allows you to collect Good Faith Estimates for each mortgage offer you consider and do a line-by-line comparison when mortgage refinancing. It is important to realize that the Good Faith Estimate is just an estimate; the actual figures on your settlement statement could change. Mortgage companies frequently try and “slip one past you,” so it is important to compare the settlement statement to the Good Faith Estimate and ask for an explanation of any changes.

So what should you look for on the Good Faith Estimate? First, locate the loan origination fee. The origination should not be more than 1-1.5% of your loan amount. Next, look for the loan processing fee. Your loan processing fee should never be more than $400, and if it is paid to a third party loan processor, their company name should be listed. Finally, make sure you are not paying Yield Spread Premium on your mortgage rate. What is Yield Spread Premium? This is the retail markup of your mortgage interest rate and according to the Secretary of Housing and Urban Development costs homeowners in the United States $16 billion dollars every year in unnecessary mortgage interest.

How can you avoid paying Yield Spread Premium when mortgage refinancing? You can learn this and other costly mortgage refinancing mistakes to avoid by registering for a free, six part video tutorial.

Danny

Louie Latour asked:




Comparison shopping when mortgage refinancing can save you thousands of dollars in unnecessary interest and junk fees. It is important to know what to look for when shopping for a mortgage, doing your homework before you apply will help you spot a good deal when you find one. Here are several tips to help you comparison shop and avoid costly mistakes when mortgage refinancing.

When you comparison shop for mortgage lender, the Annual Percentage Rate is a good starting point for making a comparison; however, it does not give you enough information to make an informed decision as to which mortgage loans are best. In order to make the best comparison of mortgage offers you need to request a copy of the Good Faith Estimate from each lender and do a line-by-line comparison of each loan offer.

Lenders are required to provide you a copy of the Good Faith Estimate within three days of receiving your application; however, this does not help you when comparison shopping. Most mortgage lenders will give you a copy just by asking. If a mortgage company or broker refuses to provide this document without your application, scratch them off your list. When comparison shopping for a mortgage loan there are also a few things you need to tell any prospective mortgage companies or brokers before submitting your application.

You need to tell each mortgage company or broker that you will pay no more than 1-1.5% of your loan amount for the origination fee. Make sure the mortgage company is not charging you more than $400 for the loan processing fee. The next thing you need to tell your mortgage company or broker is that you will pay reasonable closing costs but will not pay any retail markup of your mortgage interest rate.

This markup is called Yield Spread Premium will result in paying thousands of dollars in unnecessary mortgage interest every year. Ask the mortgage company to see the original interest rate guarantee from the wholesale lender. Comparing this guarantee with the written guarantee provided by your mortgage company will show you the markup. If your mortgage company or broker refuses to remove this retail markup of your interest rate, find another mortgage company that will

You can learn more “Win Smart/Win Ugly” strategies for mortgage refinancing, including costly mistakes to avoid by registering for a free mortgage tutorial.

Claude

Louie Latour asked:




People love to tell you “You have to comparison shop till you drop” when mortgage refinancing to get a good deal. Most homeowners that do this simply end up with the best of the worst mortgage offers available. The reason for this is that no amount of comparison shopping will keep you from a retail mortgage rate. The only way to get a wholesale mortgage rate is to negotiate with prospective mortgage companies to avoid paying Yield Spread Premium. Here’s what you really need to know about refinancing your mortgage if you want to save money.

Never heard of Yield Spread Premium? You’re not alone, according to the HUD Secretary this insidious markup will cost homeowners in the United States sixteen billion dollars this year alone. Simply put, Yield Spread Premium is the “retail” markup of your mortgage interest rate by the loan originator to get a bonus. Some mortgage brokers defend Yield Spread Premium like it’s some kind of noble endeavor on their part to get homeowners that don’t have a down payment qualified.

This is complete bollocks and only serves to justify their taking advantage of people. Here’s an example of Yield Spread Premium in action:

Suppose you refinance your home for $250,000 and according to the broker you qualify for a 6.75% interest rate. You agree to pay 1.0% for the origination fee which is a reasonable amount to pay for the broker’s services; however, what the broker isn’t telling you is that you qualified for a 6.0% mortgage rate. The broker marked up your rate because the wholesale lender pays them a bonus of 1% of your loan amount for every .25% you agree to overpay.

In the previous example you paid $2,500 to the broker for the origination fee and the lender paid them $7,500 for overcharging you. This is a total of $10,000 the broker receives for originating your loan and overcharging you. Why do lenders pay so much for loans with above market interest rates? They do this because mortgage lenders make the majority of their profits from selling their loans to investors on the secondary market. Your loan with its “retail” above market interest rate will bring a premium profit for the lender; you get stuck paying thousands of dollars unnecessarily.

The good news is that you can avoid paying this unnecessary markup and qualify for a wholesale mortgage rate. Homeowners who learn to recognize retail markup can negotiate with their loan originators to avoid paying it. You can learn more about refinancing your mortgage with a wholesale interest rate by registering for a free mortgage tutorial.

Ethel