Florida Home Loan Refinancing

Posted by Loiue Latour

March 28, 2008

by Loiue Latour

Are you refinancing your mortgage and want to get the lowest mortgage rates? There are several things you should know about the rate quotes you receive before refinancing to avoid paying too much. The quotes you get from your broker and on the Internet include commission based markup that drives up your payment by hundreds of dollars each month. Here is what you need to know about this unnecessary markup to avoid paying too much for your next mortgage.

Beware Yield Spread Premium

This commission based markup of your interest rate is called Yield Spread Premium. It is the percentage of your loan amount created when you lock and close the mortgage with higher than market interest rates. This amount is paid to your mortgage broker as a bonus for inflating your mortgage rate.

Yield Spread Premium in a Typical Mortgage Loan

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.

How Does This Change Your Mortgage Payment?

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.

About the Author:

Louie Latour specializes in teaching people how to find the best florida mortgage rates when refinancing. Before refinancing your home loan, make sure you watch RefiAdvisor’s excellent free video tutorial to florida mortgage refinancing here.

Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages.