Do You Need A Lower Interest Rate?

When you are shopping for anything, whether it’s a new suit, or a car, or a mortgage, the one thing you don’t want is to get ripped off. The fact is, the mortgage industry is not as transparent to the average mortgage consumer and therefore it is much easier to be innocently victimized when shopping for a mortgage or a refinance. To combat this, let’s look at some mortgage terms and industry practices:

– Yield Spread Premium… wait, what? Isn’t “spread” for football games and the like? Well, yes. But, the Yield Spread Premium is simply a fancy term for commission paid to the person arranging your loan; it’s really more like a bonus for overcharging you. Most people have never even heard of this term.

Origination fees (or points in some markets) have been around forever; these are the fees you pay to the bank or mortgage broker for writing the mortgage. These fees could be as much as three to four percent of the mortgage.

Mortgage loan origination is a very lucrative –and very competitive — business, and nowhere is this more evident than on the internet. The lead generation sites that you probably see advertised everywhere have large advertising budgets; have you ever thought about exactly where they get this money for all those ads? Yes, from you. If you arrange a loan through one of these sites, they will end up charging you upwards of $1200 for what is called a computerized loan origination fee. In simple English, they charge you this for taking your name and information and passing it on to a real mortgage company who in turn writes your mortgage (and charges you another loan origination fee).

Searching online is a good way to not overlook a great deal when getting a mortgage or a refinance; just be careful that you aren’t giving out your information needlessly to a third-party non-mortgage marketing firm.

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