h a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the inter

Nearly everyone overpays when taking out a mortgage loan. Unless you can recognize how retail mortgage brokers mark up your interest rate for a profit, you will overpay and probably never even know it. Here are several advanced strategies for recognizing retail mortgage broker markup and how to avoid paying it with your new mortgage loan.

Everyone that takes on a mortgage loan pays fees and closing costs to secure that loan. You will be required to pay the mortgage broker origination fees for finding you a loan, possibly pay points to the lender, and closing costs to secure the mortgage loan. It is important to note that the mortgage broker keeps the origination points as compensation for their services. After all, it’s only fair the mortgage broker be compensated for their services, right? Origination points typically run 1-3% of your loan amount. This is a lot of money you’re required to pay and more than ample compensation for any mortgage broker.

Mortgage Brokers and Greedy Wholesale Lenders

In order to understand how mortgage brokers overcharge their customers it is important to first understand how the retail mortgage market works. Mortgage brokers are basically retail vendors that sell mortgage loans for a profit. Just like the kitchen appliance store that sold you a refrigerator, a mortgage broker is simply selling you a product. In this case the product is a mortgage loan; however, if you treat it like your refrigerator purchase you will save yourself a lot of money.

When you shop for a loan using a mortgage broker, the wholesale lender that the mortgage broker is selling products for qualifies you for an interest rate. How the wholesale lender does this is the subject of our mortgage guidebook, but for the purposes of this discussion you just need to know the wholesale lender qualified you for a very specific interest rate and provided your mortgage broker with a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the intera

r origination fees for finding you a loan, possibly pay points to the lender, and closing costs to secure the mortgage loan. It is important to note that the mortgage broker keeps the origination points as compensation for their services. After all, it’s only fair the mortgage broker be compensated for their services, right? Origination points typically run 1-3% of your loan amount. This is a lot of money you’re required to pay and more than ample compensation for any mortgage broker.

Mortgage Brokers and Greedy Wholesale Lenders

In order to understand how mortgage brokers overcharge their customers it is important to first understand how the retail mortgage market works. Mortgage brokers are basically retail vendors that sell mortgage loans for a profit. Just like the kitchen appliance store that sold you a refrigerator, a mortgage broker is simply selling you a product. In this case the product is a mortgage loan; however, if you treat it like your refrigerator purchase you will save yourself a lot of money.

When you shop for a loan using a mortgage broker, the wholesale lender that the mortgage broker is selling products for qualifies you for an interest rate. How the wholesale lender does this is the subject of our mortgage guidebook, but for the purposes of this discussion you just need to know the wholesale lender qualified you for a very specific interest rate and provided your mortgage broker with a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the inter

broker.

Mortgage Brokers and Greedy Wholesale Lenders

In order to understand how mortgage brokers overcharge their customers it is important to first understand how the retail mortgage market works. Mortgage brokers are basically retail vendors that sell mortgage loans for a profit. Just like the kitchen appliance store that sold you a refrigerator, a mortgage broker is simply selling you a product. In this case the product is a mortgage loan; however, if you treat it like your refrigerator purchase you will save yourself a lot of money.

When you shop for a loan using a mortgage broker, the wholesale lender that the mortgage broker is selling products for qualifies you for an interest rate. How the wholesale lender does this is the subject of our mortgage guidebook, but for the purposes of this discussion you just need to know the wholesale lender qualified you for a very specific interest rate and provided your mortgage broker with a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the inter

at it like your refrigerator purchase you will save yourself a lot of money.

When you shop for a loan using a mortgage broker, the wholesale lender that the mortgage broker is selling products for qualifies you for an interest rate. How the wholesale lender does this is the subject of our mortgage guidebook, but for the purposes of this discussion you just need to know the wholesale lender qualified you for a very specific interest rate and provided your mortgage broker with a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the inter

h a written guarantee of that specific interest rate. What your mortgage broker does at this point is type you out another guarantee on their company’s fancy letterhead and gives it to you. Think the interest rate from the wholesale lender and the one you got from the mortgage broker are the same? Think again.

The mortgage broker marks up the interest rate on the written guarantee you receive by the amount that mortgage broker thinks they can scam you based on the interactions the two of you had. That’s right, just like the stereotypical car salesman, mortgage brokers read their customers to try and determine how savvy they are what their doing. The more the mortgage broker thinks they have an advantage, the higher your interest rate on the written guarantee will be. You got it, the average mortgage broker is no better than a used car salesman.

Why do mortgage brokers do this? The more your mortgage broker scams you, the higher that mortgage broker’s bonus will be from the lender they represent. For every .25% the mortgage broker marks up your interest rate, that person will receive an additional point, or 1% of the loan amount as a bonus for overcharging your. This retail markup of your interest rate by the mortgage broker is called Yield Spread Premium and will cost you thousands of dollars. Do you think this bonus is an incentive for giving you a fair deal and honest service from your mortgage broker? Think again!

So how do you avoid paying Yield Spread Premium when taking out a mortgage loan? You might answer “Avoid Mortgage Brokers Altogether;” however, every retail mortgage company charges Yield Spread Premium just like mortgage brokers. Homeowners that learn to recognize Yield Spread Premium when shopping for a mortgage loan can avoid paying it. It’s really that easy. To learn how you can recognize Yield Spread Premium and avoid overpaying for your mortgage loan, register for a free mortgage guidebook.