If you are in the process of refinancing your home loan in Connecticut, paying Yield Spread Premium will cost you thousands of dollars in unnecessary mortgage interest. Never heard of Yield Spread Premium? You’re not alone; the Secretary of Housing and Urban Development was recently quoted saying this markup is responsible for homeowners in the US overpaying sixteen billion dollars this year. Here are the basics of Yield Spread Premium and how you can avoid overpaying for your Connecticut mortgage loan.
What is Yield Spread Premium? It is the retail markup of your mortgage interest rate to boost the loan originator’s commission. Every mortgage loan with the exception of Bank loans includes this markup; however, if you know how to recognize Yield Spread Premium you can avoid paying it.
Since Bank mortgage loans don’t include Yield Spread Premium shouldn’t you just refinance your Connecticut mortgage with your Bank? While it’s true that Bank mortgage loans are convenient, they’re not exempt from markup. Bank mortgage rates are marked up for different reasons; Banks sell their mortgage loans to investors on the secondary market. The higher your mortgage rate, the more your Bank receives from the sale. When the Bank marks up your interest rate the markup is called Service Release Premium and is really no different from Yield Spread Premium.
How does Yield Spread Premium work? When your application to refinance your Connecticut mortgage is approved, you qualify for a specific interest rate. The representative that submitted your application knows this mortgage rate; however, they mark it up because the wholesale lender pays them a bonus for overcharging you. That’s right, for each quarter percent you overpay for your Connecticut mortgage rate, your loan representative receives a bonus of one percent of your mortgage amount.
How can you avoid paying Yield Spread Premium? Once you’ve learned to recognize this unnecessary markup you can negotiate to avoid paying it. You can learn more about refinancing your Connecticut home loan without overpaying by registering for a free mortgage tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, 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 free video tutorial: "Mortgage Refinancing - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Claim your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Connecticut Home Mortgage Refinance
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