Mortgage Refinance Information - How to Choose the Best Mortgage Lender

If you are in the process of refinancing your mortgage, choosing the right mortgage lender will save you loads of money and future headache. Choosing the wrong lender could cost you your home. This is why researching mortgage refinance information is the most important aspect of refinancing your mortgage. Here are several tips to help you choose the best lender when refinancing your mortgage.

I. Mortgage Loans are Like Toasters - Mortgage Refinance Information

Mortgage loans are commodities just like toasters and plasma televisions. There is a retail market where the average Tom, Dick, and Mary gets their mortgage and a secondary market where that very loan is sold to various institutional investors. If you treat your mortgage like a toaster purchase you will save yourself thousands of dollars in the process and avoid a number of costly mistakes.

II. Retail Mortgage Lenders Want to Overcharge You - Mortgage Refinance Information

When you contact a mortgage company or broker they have one goal for selling you a mortgage. That goal is to charge you as much as you are willing to pay for the loan. Remember that toaster? The toaster is only worth what someone is willing to pay, or overpay for it. The same is true with a mortgage loan. When you apply for a mortgage with your local mortgage company, they will provide you with a quote from a wholesale mortgage lender. The quote you receive is not the quote the wholesale lender gave them; the mortgage company will always mark the interest rate up without telling you. This markup from the retail broker or mortgage company is called Yield Spread Premium and will cost the unsuspecting homeowner thousands of dollars.

III. Never Trust a Bank - Mortgage Refinance Information

Banks don't charge Yield Spread Premium; they have their own name for it. Banks call this markup Service Release Premium or SRP. The fact that it has a different name isn't why you should never trust a mortgage banker; in fact, mortgage bankers have earned themselves a special place in Dante's Inferno for all the people they've ripped off over the years. There are laws in the United States that protect homeowners from the abuses of mortgage lenders and what are called "Predatory Lending Practices." This bit of legislation is called the Real Estate Procedures Settlement Act, or simply RESPA.

When RESPA was making its way through the Senate and the House of Representatives, the banking industry lobbied heavily to be excluded from any disclosure legislation. Bankers spent millions of dollars wooing your representatives; when all was said and done and RESPA became law, banks were exempt. This means a mortgage banker can charge you whatever they like, call the charges whatever they like, and no one is the wiser. Banks have been ripping off unsuspecting homeowners for years, this is how they make their profits. No one but the banks knows the extent of it because banks are not required to disclose their fees or profit margins. Never, under any circumstances, take out a mortgage loan from a bank.

IV. Additional Sources of Mortgage Refinance Information

You can learn more about refinancing your mortgage and avoiding costly homeowner mistakes including paying YSP on your loan by registering for a free mortgage refinance information guidebook.

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