If you are considering mortgage refinancing in California, no amount of comparison shopping will prevent you from overpaying. The reason for this is that every quote you receive includes the hidden markup known as Yield Spread Premium. Here are several tips to help you avoid overpaying when refinancing your California Mortgage loan.
Yield Spread Premium is the hidden markup of the mortgage interest rate you were approved by the wholesale lender. Your mortgage company or broker marks up this interest rate because the wholesale lender pays them a bonus for every quarter percent you agree to overpay. Your loan representative receives one percent of your loan amount for every quarter percent. This is in addition to the origination points you are already paying for their services.
How can you avoid Yield Spread Premium with your California mortgage rate? Tell your loan representative that you understand how Yield Spread Premium works and will not tolerate it with your loan. Tell that person that you will pay a reasonable fee for the origination and all necessary settlement charges but will not tolerate Yield Spread Premium. If you’re upfront when negotiating for terms you can find an honest mortgage company to work with.
Another fee you need to avoid when shopping for a California mortgage loan is the so called “Computerized Loan Origination Fee.” This is a little known fee paid to lead generation websites that collect your personal information and sell to California mortgage lenders. One well known “Lending” site that advertises on television receives as much as $1,300 for selling your contact information and financial details. Think the California mortgage lender pays this fee? Guess again; this fee is tacked on to your Good Faith Estimate and paid out of your pocket.
How can you avoid paying these ridiculous garbage fees? Always read the licenses and disclosure statements found on any mortgage site before entering your personal information. When negotiating with your loan representative tell them you will not tolerate any Yield Spread Premium. You can learn more about refinancing your California mortgage loan with a free mortgage tutorial.
