If you are a homeowner in need of a lower mortgage payment, refinancing could help meet your financial needs. There are however a number of pitfalls that result in overpaying and will prevent you from realizing any savings. Here are several tips to help you avoid overpaying for your new loan when mortgage refinancing.
There are two basic ways mortgage refinancing can lower your payment amount. The most common and ideal way of lowering your payment is to qualify for a lower mortgage interest rate. If you are unable to qualify for a lower mortgage rate you can still lower your payment by extending the term length of your loan. We’ll talk about term length; however, there are a few things about qualifying for a lower mortgage rate you might not be familiar with.
Most homeowners think the mortgage rate they receive is based on their credit score. While your credit score influences that rate, the actual interest rate you close on depends on how much the loan originator marks up your mortgage rate. Mortgage companies and brokers routinely mark up mortgage interest rates to get a bonus from the wholesale lender. The lender pays them one percent of your loan amount for every quarter percent you agree to overpay; this markup is called Yield Spread Premium.
If you’re considering mortgage refinancing for any reason, avoiding Yield Spread Premium needs to be your number one priority for the new loan. Homeowners who unknowingly agree to this markup pay thousands of dollars unnecessarily for their loans every year. Tell your loan representative that you understand how Yield Spread Premium works and will not tolerate the markup. Negotiate to pay a reasonable fee for the origination, not more than 1-1.5%, and all necessary third party closing costs. You can learn more about this negotiation with a free refinancing tutorial.
What if you cannot qualify for a lower mortgage rate? Homeowners who cannot qualify for lower rates because of their credit or financial situation can still lower their payment amount by choosing a loan with a lower term length. You’ll still need to find a mortgage company that will not charge you Yield Spread Premium; however, by choosing a 30 or even a 40 year mortgage you will lower your payment amount by spreading the repayment over a longer period of time. To learn more about mortgage refinancing while avoiding costly mistakes, register a free mortgage tutorial.
To get your FREE six-part Mortgage Refinancing Tutorial, visit RefiAdvisor.com using the link below.
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 Refinance - What You Need to Know," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com.
Get your free mortgage refinancing tutorial today at: http://www.refiadvisor.com
Mortgage Refinancing
Article Source: http://EzineArticles.com/?expert=Louie_Latour
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment