Getting a home mortgage refinancing can save a homeowner lots of money through better interest rates, terms, or conditions. Be careful though as there are a costly mistakes homeowners make which can be easily avoided. Here are a few tips that will assist you in avoiding these costly mistakes, and save you a lot of money through refinancing every month.

Always be careful and instantly cautious of and type of Yield Spread Premium

Most homeowners have no idea what a Yield Spread Premium is, if they are paying one, what it is, or how much it costs them every month. Simply put, the yield spread premium is that commission that your mortgage lender, broker, or bank receive on your home loan. The more interest that a mortgage lender or broker can add on to your mortgage, the more they make.

Typically, a commission for a home loan refinancing or modification is 3% of the homes price. Most of the time this fee is added to your monthly home loan payment. A lot of mortgage lenders and banks do not disclose these fees in a proper manner, and they are often buried deep within your mortgage documents. The mortgage wholesaler will give big bonuses to lenders and banks who get you to commit to a higher interest rate than you qualify for, and its not uncommon for this practice to occur.

A homeowner who is well prepared will be able to spot yield spread premiums and typically can avoid paying higher than needed interest rates. The best way to ensure you are getting the lowest rates possible is to negotiate with the lender or bank for the lowest rate. The mortgage lender is already profiting on closing costs and other related fees, and a lot of times a yield spread premium can be talked down. This is the best way to ensure you are paying the least amount possible every month.

Home mortgage modification or refinancing can be a great financial move for a lot of homeowners. Remember though that the best way to ensure you are getting the best deal possible is to practice patience and do some basic research beforehand. A combination of simple negotiating, patience, and research, can save a homeowner hundreds of dollars per month when they decide it is time to refinance.

-M Petrone

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