Home Mortgage Refinancing Guide

If you’re taking advantage of the Internet to shop for mortgage quotes you’ve probably seen a wide range of fees and mortgage rates from one site to the next. Nothing changes with you from one site to the next why should the mortgage rate quotes you receive be so different?

Here is your online mortgage refinancing survival guide to help you understand Internet mortgage quotes and avoid paying too much for your next home loan.

Online Internet Mortgage Companies

The first thing you should know about the big mortgage websites like Lending Tree is that most of these sites have absolutely nothing to do with mortgage loans. That’s right, despite Lending Tree’s enormous advertising budget and flashy website they have nothing to do with getting you a mortgage loan. What these websites do is collect and sell your information, known as a “mortgage lead” to the various mortgage companies and brokers that participate in their networks.

While using one of these sites is not necessarily a bad thing, sites like Lending Tree take things a step too far. If you read the “licenses and disclosure” page on Lending Tree’s website you’ll discover that if you actually take out a mortgage from one of the lenders in their network you’ll be charged a “computerized loan origination fee” by the lender. This is passing Lending Tree’s fee on to you the homeowner.

The next thing you should know about Internet mortgage quotes is that they all include commission based markup of your mortgage rate. This means you’re paying a higher interest rate than you have to just to give the mortgage company or broker a commission on your loan. This markup of your mortgage rate is called Yield Spread Premium and is a percentage of your loan amount created when the broker locks and closes your home loan with a higher than necessary interest rate. This higher than necessary mortgage rate results in a higher than necessary mortgage payment which can drain thousands of dollars unnecessarily from your budget every year.

How to Refinance with a Wholesale Mortgage Rate

It is possible to refinance your home mortgage paying a flat one percent origination fee without Yield Spread Premium. The techniques described in the free mortgage videos available on this website allow you to take advantage of the wholesale nature of mortgage rates and save thousands of dollars each year. The videos also show you how to read your Good Faith Estimate and HUD-1 Settlement statements to avoid paying lender junk fees. Register today, the mortgage videos are yours free with no obligation.

Mortgage rates dropped again this week for most loan types. The drop was not as much as we saw last week; however, it’s always good to see mortgage rates go down.

Today’s thirty year fixed mortgage rate dropped to 6.14%, down from 6.2%. This is a small drop compared to the volatility we’ve witnessed in previous weeks. Here’s a rundown of today’s mortgage rates.

Even though today’s drop is slight this does not mean there will not be large fluctuations in the coming months. The markets have not yet stabilized following recent financial turmoil and the outlook for improvement is not so good. The good news is that mortgage rates seem to be declining across the board. Fifteen year mortgage rates fell .07 points to 5.81%, the five year adjustable fell .21 points to 5.98%, and the one year adjustable actually went up to 5.33%.

Mortgage Rate Trends:

November 13th 2008

• 30 year fixed: 6.14%
• 15 year fixed 5.81%
• 5 year adjustable 5.98%
• 1 year adjustable 5.33%

November 6th, 2008

• 30 year fixed: 6.2%
• 15 year fixed: 5.88%
• 5 year adjustable: 6.19%
• 1 year adjustable: 5.25%

October 30th, 2008

• 30 year fixed: 6.46%
• 15 year fixed: 6.19%
• 5 year adjustable: 6.36%
• 1 year adjustable: 5.38%

October 23rd, 2008

• 30 year fixed: 6.04%
• 15 year fixed: 5.72%
• 5 year adjustable: 6.06%
• 1 year adjustable: 5.23%

Tracking the fluctuations in mortgage rates can be entertaining; however, it’s more useful to see how these changes affect your monthly payments. A free mortgage payment calculator will show you exactly how mortgage rates impact your payments. Here’s an example with a $200,000 home loan.

Mortgage Rates from 13 November:

• 30 year fixed payment: $1217
• 15 year fixed payment: $1667
• 5 year adjustable payment: $1196
• 1 year adjustable payment: $1114

Mortgage Rates from 30 October:

• 30 year fixed payment: $1258
• 15 year fixed payment: $1708
• 5 year adjustable payment: $1245
• 1 year adjustable payment: $1120

You’ll notice that over the last two weeks your monthly payment on a $200,000 loan would be $41 less per month just due to fluctuations in mortgage rates. That’s almost $500 per year! If you’re in the market to refinance your existing mortgage or take out a new loan to purchase your home your best bet right now is probably to stay away from the five year adjustable rate mortgage. Volatility in the market and our bad economy makes locking in a fixed rate a good idea for most homeowners.

Since we’re on the subject of today’s bad economy many homeowners are finding it difficult to get approved when refinancing their loans. This isn’t typically due to credit but in most cases is because they are underwater or upside down with their existing loans. Being “underwater” simply means that you owe more on your existing loan than your home is worth. If you’re in this situation you simply will not be able to refinance your home until you’re able to pay down your loan below your home’s value.

You can learn more about refinancing your existing mortgage without paying too much and getting the lowest possible rate by registering for the free mortgage videos on this site.

You can’t turn on the news these days without hearing about how bad the economy is or about the recession looming on the horizon. This gloom and doom about the economy is putting many homeowners off refinancing their homes.

If you are in this situation and would benefit from refinancing your first and second to get a lower payment or just want a lower mortgage rate, there are still good deals available even if your credit is less than ideal. Here are several tips to help you refinance your mortgage during this economic recession.

Mortgage Refinancing Rates Are Still Very Low

With mortgage rates hovering just over 6% now is a very good time to refinance, especially if you are carrying a second mortgage loan with a high interest rate. Many homeowners are putting off refinancing right now because they’ve heard only one in ten mortgage applications are being approved right now. The fact is that applications are being denied not because of the homeowners credit rating but because a large number of people are actually upside down in their homes.

Being upside down means they simply owe more than their property is worth. If you have equity in your home and have a recent appraisal you should have no problem refinancing with competitive mortgage rates.

How to Shop for a Mortgage Loan

Mortgage shopping is a confusing and frustrating process for many homeowners. For many the process is a flurry of confusing documents and estimates and they never really know what they’re getting until after signing on the dotted line. Mortgage refinancing doesn’t have to be like this…you can find a good deal without getting ripped off or paying too much at closing. You just need to do your homework and learn about the one thing that causes most people to pay too much for their mortgage loans: Yield Spread Premium.

What is Yield Spread Premium?

Simply put, Yield Spread Premium is a payoff to the person arranging your loan, a percentage of your mortgage amount created by locking and closing your loan with a higher than necessary mortgage rate. This may sound confusing but it’s really quite simple. Your mortgage broker charges you a fee called an origination fee for their part in refinancing your home loan. The lender pays the broker a commission for closing your mortgage with the highest interest rate possible. This commission from the lender is called Yield Spread Premium.

How Yield Spread Premium Works

Here’s an example to illustrate Yield Spread Premium in action. Suppose for example you are refinancing your home for $225,000. Your mortgage broker quotes you an interest rate of 6.75% and charges you an origination fee of 2%. In this example you will pay the broker $4,500 for their part in arranging your loan. What your mortgage broker isn’t telling you is that you actually qualify for a mortgage rate of 6.25% and they have marked your rate up to get a commission from the lender. In this example the lender is paying the broker an additional 2% of your loan amount (1% for every .25% that they overcharge you). Your mortgage broker is walking away with $9,000 for overcharging you in this case.

Some people think that because the lender is paying the broker fee and it’s not coming out of their pockets they shouldn’t worry about Yield Spread Premium. It’s not the fact that the lender is paying this fee that should concern you; it’s why the fee is being paid. In our homeowner example above the monthly payment at 6.75% will be about $1,450 per month. At 6.25% the same loan would have a monthly payment of $1,380. That’s $840 a year out of your pocket for no good reason.

Yield Spread Premium Can Be Avoided

The good news today is that this unnecessary markup of your mortgage rate can be avoided and you can refinance your home loan without paying junk fees. Finding the right mortgage broker to work for a flat origination fee of 1% without Yield Spread Premium is not difficult if you’re willing to do your homework. Fortunately for you we’ve made this very easy with free online mortgage videos that show you how to refinance with right mortgage broker while avoiding Yield Spread Premium and junk fees. Register for the online video guide today…the tutorial is yours free with no obligation.

What are mortgage bankers? You hear the term a lot but what’s the actual difference between a mortgage banker and a lender? Simply put, mortgage banks are retail loan originators that fund loans with their own cash. A mortgage broker resells loans for wholesale lenders but the mortgage bank cuts out the middleman, dealing directly with the public.

Cutting out the broker is a good thing right? Mortgage banks like Countrywide or Wells Fargo Mortgage must have the best deals because they deal directly with the public. Guess again…both Countrywide and Wells Fargo are at the top of the list of Predatory lenders in the United States.

Mortgage banks like Countrywide Home loans do not have to disclose their markup or profit margins due to a loophole in the Real Estate Settlement Procedures Act. This law, also known as RESPA, requires mortgage brokers to disclose the amount of Yield Spread Premium associated with your mortgage loan. Yield Spread Premium is a percentage of your loan amount created when the broker locks and closes your loan with an above market interest rate.

Mortgage banks do the same thing by charging you an above market mortgage rate; however, since they fund your loan with their own funds the profit they generate by inflating your interest rate is called Service Release Premium. Countrywide does this and pockets the cash from your higher mortgage rate by selling the loan to investors on the secondary mortgage market.

Because Countrywide Home Loans is exempt from the Real Estate Settlement Procedures Act they will never tell you how much they profited by overcharging you.

Wholesale lenders do not charge a fee for locking in your mortgage rate. It is in fact possible to refinance your home with a wholesale mortgage rate if you find the right broker to arrange your loan. There are brokers out there willing to work for a one percent origination fee without taking Yield Spread Premium on your loan.

This allows you to get as close to a “par” or wholesale mortgage rate as possible. Par is a term used to describe mortgage rates that have not been marked up with Yield Spread Premium or one that requires you to pay points to qualify for that rate.

You can learn more about refinancing your home loan with a wholesale mortgage rate by registering for the free videos available on this website.

Mortgage refinancing is the process of paying off your current home loan with the proceeds of a new mortgage while using your property as loan collateral. There are a number of advantages to refinancing and when done properly can keep you squarely on the road to financial success. Here are several tips to help you decide if mortgage refinancing is right for you.

Is Mortgage Refinancing Right For You?

In order to decide if refinancing is the right move for your situation it is important to understand how the process works. If you are considering refinancing your mortgage as part of a strategy to get out debt you can easily consolidate higher interest debt and gain a tax deduction when refinancing your home. One of the most important considerations when refinancing your home is to secure the lowest possible mortgage rate. The problem with the rate quotes you find on the Internet and from your local mortgage broke is that the person providing you the quote has marked up the rate for a commission. Unless you can recognize and avoid this markup you’ll never get the lowest possible mortgage rate for your home.

Consolidate High Interest Debt

If you are considering consolidating your high interest debt when refinancing you will be borrowing against the existing equity in your home to pay off credit cards and other installment loans. This means you will be borrowing more than you owe on your existing mortgage which could result in qualifying for a slightly higher mortgage rate. A higher mortgage rate results in a higher monthly payment; however, the tradeoff is that you will be paying less to creditors and gain a tax deduction for all of the interest you pay on the consolidated debt.

Another advantage of refinancing your mortgage could be switching to a fixed or variable mortgage rate. Variable or Adjustable Rate Mortgages (ARM) typically have lower rates than their fixed rate counterparts. If you are in need of a lower payment and are not consolidating debt choosing an Adjustable or Hybrid Rate Mortgage could lower your payment if you are currently paying on a fixed rate mortgage loan. Another common reason for refinancing is to avoid a costly balloon payment if you don’t have the cash on hand to pay it off.

There are a number of options available to you when refinancing your mortgage. Direct lenders are available through banks, credit unions, and other finance companies that fund their own loans. This is not necessarily the best option as any entity that funds its own loans is exempt from the Real Estate Settlement Procedures Act and does not have to disclose their profit margins or markup of your loan. Take out a mortgage from your bank and you’ll never know how much you could have saved refinancing your home.

Mortgage Brokers Access Wholesale Rates

A better option is to refinance with a mortgage broker. These individuals have access to wholesale rates and can offer you a much more competitive deal than your bank. The problem is that many brokers pad their commission by marking up your rate, often without telling you. Once you learn to recognize and avoid this unnecessary markup of your mortgage rate you’ll have access to wholesale rates and can literally save thousands of dollars every year.

You can learn more about your mortgage refinancing options, including strategies for avoiding junk fees and the markup of your mortgage rate with the free videos found on this site; register today using the links found at the top of this page and you’ll be on the path to saving thousands of dollars in unnecessary mortgage interest and fees.