Are You Thinking Of Refinancing?

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When shopping for a refinance mortgage lender to refinance your home, there are a number of things you should know beforehand in order to not get ripped off by a seemingly innocent-looking mortgage broker. Mortgage brokers always (almost always) mark up your interest rate in order to receive a bigger commission from the mortgage lender that they represent. If you aren’t aware of this markup you’ll be paying much more in interest than you otherwise would have to pay if you were able to avoid this “fee.”

The Real Estate Settlement Procedures Act (RESPA for short) protects you when you get a new mortgage or refinance your existing mortgage by requiring mortgage brokers to be upfront about their fees, costs and broker markup prior to writing your mortgage. The powerful banking industry lobby got this law to exclude standard banks; therefore, you have to be more diligent when shopping for a mortgage from a regular bank rather than a mortgage broker.

Some brokers markup their mortgages more than others. This fee is noted in the documents as a Yield Spread Premium, and, while it’s perfectly legal, it’s still nefarious and a fee you shouldn’t get stuck with. The big issue with this fee is that you’re already going to be paying an origination fee; why pay more of a commission than you absolutely have to?

Most standard mortgages have terms of 15 or 30 years; however, nowadays, there are terms available of forty or even fifty years. If you are extending the term of your loan, you will be paying a lower amount per month, but since you are paying that payment for many more months, your total overall paid amount could be substantially higher than before you refinanced.

Now that you know some of your options, you can make a more informed decision. There are quite a few options available that are able to help you during this time.

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