If you’re in the process of refinancing your home mortgage, comparing rate quotes when shopping for a new loan can save you a lot of money. The problem for most homeowners is that they don’t know what they’re looking at when comparing quotes. Here are several tips to help you compare mortgage quotes and find the perfect mortgage when refinancing.
The first thing you should know when comparison shopping mortgage quotes is that lenders don’t care about quoting accurate mortgage rates. Try calling around and you’ll get a wide range of interest rates ranging from reasonable to absurd. Most mortgage brokers lowball their mortgage quotes just to get your information. In order to properly determine a homeowner’s mortgage rate it takes 17 items on an application; the quotes you receive without this information are next to worthless.
Another reason your loan representative has no interest in quoting you an accurate interest rate is that they plan on raising your mortgage rate before closing.
Loan originators get paid for charging homeowners above market interest rates. Your broker wants you to believe they’re working hard to get you the best deal possible; however, they’re actually inflating your loan for a commission. This markup of your mortgage interest rate is called Yield Spread Premium and according to the HUD Secretary will cost American homeowners nearly sixteen billion dollars this year.
How can you avoid this unnecessary markup of your mortgage rate while comparison shopping for a new loan? Homeowners who learn to recognize Yield Spread Premium can negotiate with their loan originator to avoid paying the markup. You can learn more about refinancing your mortgage without paying too much with a free mortgage tutorial.
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