Negotiating with your loan representative when mortgage refinancing is much more than haggling over interest rates. Your mortgage company needs to accept your terms before you agree to their loan. Didn't know you had terms for your mortgage company? Here are several tips to help you negotiate with your loan representative when choosing a company or broker for mortgage refinancing.
If you're in the process of mortgage refinancing choosing the right lender is one of the most important aspects of your new loan. There are several types of lenders you need to avoid when mortgage refinancing, namely banks and broker banks. Banks and Broker-Banks are exempt from disclosure laws that protect homeowners from abusive lending practices. Never refinance your mortgage loan with a Bank or Broker Bank.
Once you have a mortgage company or broker that you're considering there are a number of things you need to discuss with the loan representative. First, tell that person you will pay 1-1.5 percent of the loan amount for the origination and a reasonable loan processing fee. Your loan processing fee should be no more than $400. Next, tell your loan representative that you will not pay any retail markup of your mortgage interest rate. This markup of the interest rate by your mortgage company is called Yield Spread Premium.
Mortgage companies and brokers mark up your interest rate because they receive a bonus from the wholesale lender for overcharging you. For every quarter point you agree to overpay the wholesale lender pays your mortgage company or broker 1% of your loan amount as an incentive for marking up your interest rate. How can you tell if your mortgage rate has been marked up? After you tell your loan representative you will not pay Yield Spread Premium, ask to see the lock agreement from the wholesale lender. Compare this lock to the one your mortgage company provides you and you'll see any markup of your interest rate.
You can learn more strategies for mortgage refinancing while avoiding costly mistakes by registering for a free six-part video tutorial.
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