Homeowners can typically save a lot of money through mortgage refinancing. However, there is one big costly mistake which a homeowner can easily avoid when getting a mortgage refinancing. After reading this, homeowners will be easily able to detect, and avoid, this costly mistake.

Be aware of something called a “Yield Spread Premium”
Most homeowners, have never heard of such a thing as a yield spread premium. They have no idea if they are paying it, what it is, or that they have been paying it for years already. Simply, a yield spread premium, is the mortgage brokers commission on the loan from the lender. The bigger interest rate the broker can get the homeowner into, the bigger their commission, or “Yield Spread Premium”.

Generally, around 3% of the homes total value will be the amount of the yield spread premium. Mortgage brokers, lenders, or banks, will typically never even tell a homeowner of these charges, and a homeowner is left to find them on their own. On top of all of that, the wholesaler of the home loan, which financially backs the lender, will also give bonuses to both, whenever they are able to charge a higher interest rate then necessary.

Wholesale Rate Mortgage Refinancing
Homeowners who are able to spot any yield spread premiums, can typically negotiate them down, or avoid them altogether prior to signing the loan. This will help homeowners having to pay interest rates that are unnecessarily to high, thus saving them even more money.

The best way a homeowner can save money though is by doing some basic research and comparing different home loan refinancing offers from different mortgage lenders. Homeowners everywhere will save a lot of money by getting a proper refinancing on their mortgage, and you can too.

-M Petrone

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