When refinancing a mortgage, you will quickly realize that sometimes there are all types of fees and markups which, in some cases, will end up making you pay too much. Getting the best home loan refinance possible means avoiding as many unnecessary fees and costs as possible. Here are some common tips which can help you become more educated about mortgage refinancing, and help you understand different fees and costs.

Dealing with a variety of different mortgage lenders and banks can often result in a wide variety of different options and choices. Also, there will be different fees or costs with each loan type, that are different from lender to lender. Were you aware that when you speak with a lender or bank that the quoted interest rate you receive includes a commission for the person who got the loan together? There is, and it is very common. However, there are ways you can avoid paying that commission markup, and get a better, “wholesale” interest rate.

Basically, a whole sale interest rate contains no points to be paid, or any commission fees for the individual broker. This does not mean that no money is earned by the particular person who helped you, it just means that there fees are to be paid upfront rather than added on to the loans total. Paying the fees upfront is a better alternative than paying interest on them for the length of your home loan. Also, the mortgage lender who helped you is usually paid in two different ways, they make money on the upfront loan origination costs, and they also typically receive a little kickback from the lender they work for. So paying unnecessary fees is pointless, not needed, and costly.

To avoid paying these fees, and get yourself a wholesale interest rate when refinancing, you will need to search. However, it is not typical that the big bank, or flashy mortgage lender will be offering a whole sale rate. These types usually make all of their money from junk fees and other costs. Not only that, but they need to charge those fees to pay their costs and overhead every month.

Small companies with little expenses, and a small customer base, are often the best choice when seeking a wholesale mortgage interest rate. These smaller lenders have the flexibility, and small overhead, to avoid having to charge you fees which are not needed. The smaller players in the market are hungry for business and often charge a flat fee for their services. This fee is completely separate from your interest rates, and home loan deal. Often, a flat fee system is the best way a homeowner can ensure they are getting the best refinancing deal possible.

These tips should help you understand how interest rates work when refinancing, and how to avoid paying too much.

-M Petrone

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