How to Refinance Your Mortgage Without Paying Too Much


Mortgage refinancing can save you money if you get a better deal on the new loan. There are a number of expensive pitfalls you need to avoid that can result in overpaying thousands of dollars when refinancing. Here are several tips to help you avoid paying too much when refinancing your mortgage.Beware Yield Spread Premium (YSP)Most homeowners have never heard of YSP and don’t realize they’ve been paying it since purchasing their homes. Yield Spread Premium is the markup your loan originator adds to your interest rate to get a commission from the lender behind your mortgage. This commission can be as high as 3% of your loan amount and results in paying an above market interest rate for the entire duration of your loan.Why do mortgage brokers charge Yield Spread Premium? Your broker marks up the interest rate you were approved because the wholesale lender pays a bonus of one percent of your mortgage amount for every quarter percent you agree to overpay. Your mortgage broker will never tell you this is happening and the disclosure is buried deep in your mortgage documents.You Can Refinance With a Wholesale Mortgage RateHomeowners who learn how to recognize Yield Spread Premium can avoid paying the markup by negotiating with potential mortgage brokers. You’re already paying a perfectly reasonable origination fee for the mortgage broker’s work; any amount of Yield Spread Premium you pay is not only unnecessary but is taking advantage of you for a commission.You can learn more about your mortgage refinancing options, including other expensive pitfalls you need to avoid with a free mortgage toolkit.