Yield Spread Premium is a little known aspect of your mortgage that results in paying thousands of dollars in unnecessary mortgage interest. If your loan originator was marking up your mortgage interest rate to make a profit, wouldn’t you want to know about? Here are several tips to help you avoid this little known markup of your mortgage interest rate.
Mortgage loans are retail products just like anything else you purchase. There is a wholesale market and a retail market where consumers purchase mortgage loans. Just like any other retail market, the amount you pay depends on where you go and who you know. Many homeowners think what they pay is based on their credit; however, while your credit does play a role, the amount you pay for your mortgage depends largely on how much of a commission your loan representative receives for your loan.
When your mortgage application was approved you qualified for a specific mortgage rate. This is a wholesale mortgage rate; your mortgage company or broker marks this interest rate up because the lender pays them a bonus for overcharging you. For every .25% you agree to pay over the rate you qualified, the mortgage company receives a bonus of 1% of your loan amount. Because you are already paying origination fees for this company’s services, usually 1.5% or more, agreeing to pay Yield Spread Premium is like paying double for your mortgage.
Not only does the mortgage company get paid double, but you get stuck paying a higher mortgage rate which can add up to thousands of dollars each year. The good news is that you can avoid Yield Spread Premium. To learn this and other costly mistakes to avoid with your mortgage, register for a free mortgage tutorial.
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Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. To get your hands on this free video tutorial: “Mortgage Refinancing - What You Need to Know, " which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit .
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Mortgage Yield Spread Premium