Refinancing Your Mortgage During The Holidays
Posted on March 5, 2008
Filed Under Business |
If you’re thinking about refinancing this holiday season but aren’t sure if this is the best time of year for a new mortgage loan, there are a number of things you should consider. While the holidays tend to be a slow time for lenders, there are many good deals to be found for the savvy comparison shopper. Here are several tips to help you decide if mortgage refinancing is right for you during holiday season.
Common Reasons For Refinancing Your Mortgage
Many homeowners refinance their mortgages during the holidays to borrow cash against the equity in their homes. While this may not be the best use for home equity, it is your money and you can use it any way you see fit. Other common reasons include consolidating other high interest debt such as credit cards or lowering your monthly payment amount.
Refinance With a Wholesale Interest Rate
You can save yourself a lot of money refinancing with wholesale mortgage rates. Getting a wholesale mortgage rate is easier than you think; homeowners who do their homework and learn how mortgages are originated can take advantage of wholesale rates when refinancing. What makes a mortgage rate wholesale? It’s simply the commission based markup added by the person originating your loan. This markup is completely unnecessary and you can negotiate to avoid paying it.
Yield Spread Premium
Commission based markup of your mortgage rate is known as Yield Spread Premium. Mortgage brokers and other loan originators markup up your rate because the lender pays them a commission for closing loans with above market rates. The problem is that most mortgage brokers won’t tell you that they’re doing this with your interest rate and frequently disguise the markup in your loan documents.
How can you tell if a mortgage offer includes Yield Spread Premium? Ask to see the current rate sheet from the wholesale lender. Don’t accept one written on the mortgage company’s letterhead. Make sure it comes from the wholesale lender. Tell your mortgage broker that you understand how the markup works and will not accept any mortgage that includes lender paid commission.
Watch
When comparing loan offers you’ll need to keep an eye out for junk fees included by your loan originator. These are fees that have nothing to do with the lender but were slipped in by the broker to increase their profits. If you find anything on your Good Faith Estimate or HUD-1 statement like a lock fee, application fee, courier fee or processing fee you should question your mortgage on the validity of these garbage fees. Junk fees may have slightly different names but they all serve the same useless purpose that is to make your mortgage broker more money at your expense. It’s sad to say that mortgage brokers are little different that used car salesman and you have to treat them as such to avoid being ripped off.
Beware Your Good Faith Estimate
The Good Faith Estimate and HUD-1 statement are the only good way to compare fees on various loan offers. Many people tell you to rely on the Annual Percentage Rate for this; however, because there is no standard method of calculating the APR it cannot be trusted for comparison shopping. The Good Faith Estimate isn’t much better and you should keep in mind that this document is only as good as your mortgage broker (car salesman) is honest.
Remember that the Good Faith Estimate is really just an estimate. You should always reconcile this document against the HUD-1 statement before signing your loan contract. This will prevent you from becoming a victim of bait and switch sales tactics employed by many mortgage brokers. Always treat any mortgage offer with a healthy dose of skepticism and you’ll be on your way to refinancing this holiday season without paying too much for your new mortgage loan.
You can learn more about your mortgage refinancing options, including costly pitfalls to avoid like Yield Spread Premium and other junk fees with a free mortgage DVD. To get your FREE Mortgage Refinancing DVD, visit RefiAdvisor.com using the link below.
Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this “Mortgage Refinancing DVD,” which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, click the link below.
Get your free mortgage refinancing DVD today at: http://www.refiadvisor.com
Tags: mortgage, mortgage broker, mortgage rates, mortgage refinancing, yield spread premium
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