Sunday, May 31, 2009

Mortgage Refinancing – Refusing to Yield to Yield Spread Premium

If you are in the process of refinancing your mortgage loan, shopping smartly will help you avoid a fleecing by your mortgage company. Your Mortgage company works for commission and the more they get you to pay, the more money they make. Unfortunately, mortgage companies are rewarded when they con you into overpaying for your mortgage refinancing. This markup of your interest rate by the mortgage company is called Yield Spread Premium and avoiding it will save you thousands of dollars. Here are several tips to help you avoid paying Yield Spread Premium on your next mortgage loan.

Mortgage companies mark up your mortgage rate because the wholesale lender rewards them for overcharging you. The more you overpay, the more your mortgage is worth when sold on the secondary market. For every .25% you agree to overpay your mortgage company is paid 1% of your mortgage loan. This markup results in your overpaying thousands of dollars of unnecessary interest each year! The mortgage company receives this bonus in addition to the origination fee they are already charging you. If you agree to pay Yield Spread Premium you are actually paying double for your mortgage loan.

So how does Yield Spread Premium work?

Suppose your mortgage company tells you they can refinance your mortgage at 6.25%. What your loan representative isn’t telling you is that you qualified for 6.0% and they’ve marked it up to receive a bonus from the lender. If you were refinancing your mortgage for $250,000, your mortgage company pockets $2,500 in addition to the $2,500 you paid for loan origination! How do you avoid paying Yield Spread Premium? Ask your loan representative to see the rate sheet from the wholesale lender. This will tell you the exact mortgage rate you qualified for. If the loan representative refuses to show you this rate sheet you should find another mortgage company to work with.

By Louie Latour

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Saturday, May 30, 2009

Saving Time and Money With Mortgage Lead Sales

Even the most effective mortgage loan provider will suffer without a bevy of interested consumers. As we ponder whether a tree falling in the forest makes a sound, we should also question whether lenders and mortgage brokers exist without a constant supply of mortgage leads. Without a replenished marketplace can a business not just survive but flourish?

When Tim Berners-Lee birthed the World Wide Web, mortgage loan providers were blessed with a communications tool that revolutionized the industry. No longer would effective mortgage loan providers be without a plethora of potential customers. The cost of mortgage lead sales plummeted, cementing such practices to the base of any successfully lender and mortgage brokerage operation.

Mortgage lead sales are typically generated via on-line forms completed by eager mortgage seekers in the market for a new mortgage or interested in refinancing an existing one. Pertinent information about the consumer is gathered at this stage with regards to employment, home ownership, credit and a desired loan amount. Beware, however, the unverified mortgage lead sales. A quality mortgage lead sale is always verified before being sold, and its sale should be restricted a very limited number of firms.

Mortgage lead sales are inexpensive and effective, providing effective mortgage loan providers with a market for either a home equity loan, purchase, refinance, or debt consolidation loan. A mortgage broker’s time is far better spent closing loans rather than searching for borrowers.

As any effective mortgage loan provider knows, time is money. Mortgage lead sales save loan providers both.

By Mark Carey

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