Mortgage Refinancing – What You Need to Know Before Taking Out a New Home Loan

Mortgage refinancing can be a stressful process for anyone. No homeowner wants to pay too much or accept unfavorable terms for their loan. Here are several tips to help you comparison shop and avoid the perfectly legal hidden fees mortgage originators use to boost their profits.

The most important hidden cost you need to avoid is Yield Spread Premium. Every mortgage in the United States is sold as a retail product and includes this hidden markup. The good news is that homeowners who learn to recognize how mortgage originators mark up mortgage interest rates can avoid paying this unnecessary mortgage interest and save thousands of dollars.

The first thing you need to know when shopping for a mortgage is what wholesale mortgage rates are at the time you are applying. You can find the approximate going mortgage rate on Fannie Mae's website under the weekly yield. The weekly yield is posted with Fannie Mae's press releases. The mortgage rates posted on Fannie Mae's website are a week old but still give you a good idea where mortgage rates are headed. Now that you have an idea of what wholesale mortgage rates are you need to find a mortgage company or broker that agrees not to mark up your mortgage interest rate.

When shopping for mortgage companies tell the loan representative you will pay a reasonable origination fee for their services and all necessary third party settlement charges, but will not pay any markup of your mortgage interest rate by their company. A reasonable origination fee (often called origination points) is no more than 1.5% of your loan amount. The markup you are trying to avoid is called Yield Spread Premium and if you unknowingly agree to pay it you will spend thousands of dollars for your mortgage unnecessarily.

You can learn more about refinancing your mortgage without spending too much for the financing with a free mortgage tutorial.