Refinancing Your Florida Mortgage
By Louie 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
The markup of your mortgage rate for a commission is known
as Yield Spread Premium. It is simply a percent of your
mortgage that is created when you lock and close your loan
with above market rates. This percentage is paid to your
mortgage company or broker as an incentive for overcharging
you.
Yield Spread Premium in Action
Suppose you're refinancing your home loan for $350,000 with
a mortgage rate of 6.5%. The broker charges you a 1% fee
for arranging you loan meaning you'll have to pay this
person $3500 at closing. What your broker isn't telling you
is that you actually qualified for a 6.0% mortgage rate and
they've marked it up because the lender is paying them 2% or
$7000 for overcharging you. You get stuck with a higher
than market mortgage rate meaning you'll pay thousands of
dollars in finance charges unnecessarily.
How Does This Change Your Mortgage Payment?
Suppose you refinance your home with a fixed rate mortgage
with a 30 year term length. The mortgage your broker told
you that you qualified for at 6.5 percent would give you
payment of $2,200 per month. If you got the mortgage you
qualified for at 6.0% your payment would only be $2,090.
That's a savings of $1,320 per year all because your
mortgage broker took advantage of your situation!
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.
Louie Latour specializes in showing seniors how to get the
best Florida mortgage rates when refinancing. Before you refinance
your home loan, make sure you watch RefiAdvisor's excellent free
video guide to
Florida mortgage refinancing here.
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