If your thinking about getting a mortgage refinance, be aware that there are a lot of costs and markups that you should lookout for. These fees and markups will cost you extra money, but can be easily avoided. Here are some tips to help you avoid paying too much when refinancing a mortgage.

Were you aware of the fact that the interest rate you get from a big lender or bank already includes markups, and commissions in it? As opposed to automatically accepting their offer, break it down. You will quickly see the interest rate you qualified for is lower, but the one you were quoted was higher because it is riddled with extra costs and markups. It is possible to get an interest rate that does not include these junk fees. That type of interest rate is often called the “par” or wholesale rate.

A wholesale interest rate, or a par rate, is one which does not carry commissions or bonuses for the lender or bank. Also, a wholesale rate will not require you to pay any points on it in advance. While mortgage lenders and banks do deserve to garner a profit from allowing a homeowner to refinance, they do not need to charge extra interest rates to achieve that. It is much better to pay off fees and closing costs up front, or at least separately. This way, you do not end up paying interest on the closing costs and fees, leading to more lost money. Mortgage lenders, brokers, and agents always will get paid in two different ways. They will make money off of the loan origination fee, and they will get compensation from the lender who they have used to get you your refinancing deal. There is no reason to add in junk fees in addition to these costs.

Being a genius in finances is not needed to be able to get a wholesale interest rate of your own. To find the “par” rate, you will need to find the right lender or bank to help you. Large flashy banks and lenders typically will never offer a wholesale rate. They have too much overhead and profit margins to meet. However, a smaller or up and coming mortgage lender, broker, or bank, is more likely to extend you an offer with a wholesale rate. They will also be more upfront with you about the total closing costs and fees, as this is the only place they will make a profit.

Many mortgage lenders and banks will not offer this type of rate. It is up to the homeowner to go out and pursue the best rates and deals possible. Doing some basic research like this prior to refinancing is one of the best things a person considering refinancing can do.

-M Petrone

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