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Bad Credit Mortgage Loan Refinancing Rate Info

Are you thinking about refinancing your home loan but aren’t sure how to get the best mortgage rate? Choosing a lender to refinance can be a confusing process and if you pick the wrong person to arrange your loan you could pay thousands of dollars too much every year. The reason this happens is that your mortgage company or broker adds commission based markup to your mortgage rate. Homeowners who learn to recognize this markup can save themselves thousands of dollars every year. Here are several tips you can use to get the best Bad Credit Mortgage Loan rate when refinancing your mortgage.What Is Commission Based Markup?When you refinance your home loan you’ll pay an origination fee to the person arranging your loan. In addition to this fee the lender pays a commission to the broker for locking in and closing with a higher than market mortgage rate. This fee the lender pays is called Yield Spread Premium. When you learn how to avoid this markup of your mortgage rate you’ll be able to take advantage of wholesale rates and save thousands of dollars each and every year you have a mortgage loan.Yield Spread Premium And Your MortgageTo illustrate the commission based markup known as Yield Spread Premium here is one example. You need to borrow $250,000 to refinance your existing home loan and the broker agrees to charge you a one percent fee. You close with a 6.75% mortgage rate and pay $2,500 to the broker for loan origination. What you don’t know is that the lender actually approved you at 6.0% and the broker marked it up for the commission. In this example the lender pays your broker a $7500 bonus for overcharging you on top of the $2,500 you’ll pay at closing.How Yield Spread Premium Affects Your Mortgage PaymentIs .75% of your mortgage rate worth worrying about? In the previous example if you refinanced with the rate you qualified at six percent your payment would $1,498 per month. Had you agreed to the mortgage rate that includes Yield Spread Premium your mortgage payment would be $1,621 per month at 6.75%. This adds up to $1,476 per year that you’ll pay to give your mortgage broker a bonus.Yield Spread Premium Can Be AvoidedIf you learn how to recognize this unnecessary markup of your mortgage interest rate you’ll save thousands of dollars every year on every mortgage you have. You can refinance your home loan paying the broker a one percent fee with a wholesale mortgage rate. You can learn more about refinancing with a wholesale rate without paying lender junk fees.