California Mortgage Refinance – Finding a New Loan Without Overpaying

If you are refinancing your California mortgage loan it can be difficult to know which loan is best for you. There are dozens of loans to choose from and not every mortgage will be right for your situation. Doing your homework and learning how mortgage companies make their money will help you avoid paying too much. Here are several tips to help you find the perfect mortgage when refinancing your California mortgage.

Many homeowners elect to refinance their California mortgage loans with their banks due to their convenience; however, before you do this it is important to explore your options and qualify for the lowest mortgage rate. Avoiding the hidden markup of Yield Spread Premium will allow you to qualify for the lowest mortgage interest rate based on your credit and qualifying ratios.

What is this Yield Spread Premium? If you've never heard of Yield Spread Premium before, it is simply the retail markup of your mortgage interest rate to boost your loan originator's commission. The wholesale lender that approved your California mortgage qualified you for a specific interest rate; however, your mortgage company marks this rate up because the lender pays them a bonus for overcharging you. For every quarter percent you overpay, the mortgage company receives a commission of one percent of you loan amount.

You might ask, shouldn't I just refinance with my bank since they don't use wholesale mortgage lenders? Banks are just as guilty of inflating their mortgage rates for different reasons. Banks sell their mortgage loans to investors on the secondary market. The higher your mortgage rate, the more money your Bank makes from the sale. When a Bank marks up your mortgage interest rate to make a profit from the sale it is called Service Release Premium.

How can you avoid paying this unnecessary markup of your California mortgage rate? Simply learn how to recognize the markup and you can negotiate with lenders not to pay it. You can learn more about refinancing your California mortgage without overpaying with a free mortgage tutorial.

Adjustable Rate Mortgage Refinancing – Managing the Risks

Many homeowners shy away from Adjustable Rate Mortgages because they associate the risks with a chance of loss. While it's true that Adjustable Rate Mortgages are riskier than fixed rate loans, this risk is manageable and can save you thousands of dollars. Here are several tips to help you decide if Adjustable Rate Mortgage Refinancing is right for you.

What Are The "Risks?"

The risk comes from the possibility for payment shock when your lender adjusts the interest rate. Adjustable Rate Mortgages are tied to a financial index and when the lender changes your interest rate it will based on that index plus margin. Margin is the lender's markup of your interest rate for their profit. Your loan is adjusted at regular intervals specified in your loan contract, often 12 to 24 months. The risk of payment shock comes from the lender raising your monthly payment because the interest rate goes up and your budget cannot support the higher amount.

Many homeowners who abuse the riskier types of Adjustable Rate Mortgage loans ultimately lose their homes because they do not fully understand how these loans work. Adjustable Rate Mortgages can save you money if you take advantage of their built in safety features and use the loans properly. Adjustable Rate Mortgages have safety features called "caps." Caps limit the amount your interest rate and payments go up when the lender adjusts your payment, and over the lifetime of the loan. You can learn more about Your Adjustable Rate Mortgage options, including costly mistakes to avoid with a free mortgage refinancing tutorial.

Mortgage Refinancing Online - Watch Out For Hidden Fees

If you are refinancing your mortgage loan on the Internet there is a hidden fee you are likely to encounter that could cost you as much as $1,300. You will be required to pay this fee simply because you typed your name and address into a form on the wrong mortgage site. Here are several tips to help you avoid this unnecessary garbage fee when refinancing your mortgage online.

The Internet can be an excellent resource for finding a good deal on your mortgage loan. The problem with shopping for a mortgage online is that it can be difficult to determine who the actual mortgage lender is. There are plenty of websites out there masquerading as mortgage lenders, even well known websites with catchy phrases you see on television. These sites actually have absolutely nothing to so with mortgage loans. They only collect your personal information and sell it to mortgage lenders and brokers.

The bad news is that the mortgage lenders and brokers don't pay the fee. The fee these company pay for mortgage leads is added to your settlement costs when closing on the mortgage. The fee appears on your Good Faith Estimate as a "Computerized Loan Origination Fee" and in the case of one well known "mortgage website" that advertises on television, it will cost you as much as $1,300. This is money out of your pocket just because you filled out a form on the wrong website.

How can you avoid paying Computerized Loan Origination fees when refinancing your mortgage loan? Before you fill out any contact forms on the web read the fine print. You'll find the information in the Licensees and Disclosure section on many "mortgage" websites. If you visit a site that does not have this disclosure statement, consider scratching that site off your list because they probably represent a special category of mortgage lender that is exempt from the Real Estate Settlement Procedures Act. You can learn more about your mortgage refinancing options, including costly mistakes to avoid with a free mortgage refinancing tutorial.

Mortgage Refinancing – Watch Out for Teaser Interest Rates

Mortgage lenders often use teaser interest rates to hook unsuspecting homeowners with unbelievable low mortgage rates. These teaser rates and the mortgage payments they are based on are only valid for a short period of time before the contract mortgage rate takes over. Here are several tips to help you avoid payment shock from a teaser rate when refinancing with an Adjustable Rate Mortgage.

Mortgage lenders frequently use teaser rates on Adjustable Rate Mortgages to get their phones ringing. The problem with these loans is that many homeowners think the teaser rate is their contract mortgage rate and don't understand that the teaser is only valid for a short period of time. At the end of the introductory period, often only six months, the lender adjusts your mortgage to the contract rate and the payments go up. For homeowners who have budgets stretched to the limit before the adjustment, this results in payment shock.

Teaser rates are a largely responsible for the soaring number of foreclosures in the United States. Homeowners who do not fully understand their interest only or option Adjustable Rate Mortgages overextend themselves and cannot afford the payments when the lender resets their payments. When used for the short term Adjustable Rate Mortgages have very little risk and offer low payments; however, if you have little tolerance for financial risk you should avoid using Adjustable Rate Mortgages for the long run.

You can learn more about your mortgage refinancing options, including costly mistakes to avoid with a free mortgage tutorial.