Yield Spread Premium - Say What?Yield Spread Premium is the most common reason to lose a mortgage rate lock. Keep reading to learn how to protect the mortgage rate you think you locked. Interest Rates And Fees ExplainedToo much losing is going on. I have lost my patience! Homeowners are losing their mortgage rate lock! And much of this loss is due to yield spread premium (YSP). Don't get me wrong. YSP rebates used responsibly by mortgage brokers can be beneficial to you. It works like this. A mortgage broker is offered wholesale money from lenders. The higher the locked-in interest rate, the greater the yield spread premium rebated back to the broker. Originally the yield spread premium was intended to be applied to mortgage closing costs or mortgage broker fees. This helped home buyers use their cash efficiently to make larger down payments. In the event of a refinance, yield spread premium helped a homeowner finance less and retain more equity. Written Mortgage Rate Lock AgreementBut what happens when fees AND a significant YSP are charged? Can we all say "double dipping"? Now I can't tell you what constitutes fair closing costs or how big a YSP rebate should be but I will say this. Had a homeowner insisted on receiving a written mortgage interest rate lock agreement and good faith estimate, proof of the promised rate and fees would exist. What Happens To Yield Spread PremiumAre you wondering why I said yield spread premium is the greatest cause of losing a rate lock? There's an easy answer. If the mortgage broker never followed through with a lock-in before interest rates rose, increased rates lowered your YSP rebate. In addition to losing any profit, if rates rose high enough, he would have to use his own money to close the transaction. Where is the incentive for a broker to close? Your mortgage loan just became a hot potato. The broker cannot drop it fast enough. There is no profit left for him. Sadly, without a written rate lock agreement, a borrower cannot prove the low rate of a lifetime that was supposed to have been locked. It's time for this practice to end! Get your mortgage rate lock agreement along with mortgage closing costs in writing. You owe it to yourself. Five Reasons To Get Written Lock AgreementsNot that I want to dwell on the negative. But I do want to impress upon you why getting your rate lock agreement IN WRITING is a must! Mind you, not all brokers have unethical practices. But if the number of stories on the internet about losing rate locks is any indication, I don't recommend taking chances. Getting a written rate lock can help prevent...
More Help Understanding Mortgage Closing CostsDo you know the one question to ask to save huge amounts of money over the life of a mortgage? Find it at How To Lasso Mortgage Closing Costs on my newest website Prime-Real-Estate-Articles.com. After all, if you have been reading my articles, you know what I am going to say. It is your mortgage. No one cares more about it than you. I know you deserve the best! Ask Kate To Translate Contact Kate is specifically designed to answer your questions and create dialog regarding mortgage financing. Finding The Help You Need For Locking RatesThe question inspiring this page Get Mortgage Rate Lock In Writing My Interest Rate Lock Guarantee - Help for timing your rate lock. The best solution to avoiding hidden fees is to ask the right questions before you lock mortgage rates. All about getting mortgage broker fees in writing - Otherwise your rate lock is meaningless! How good is a mortgage interest rate lock guarantee? In the end, you have to read your lender's paperwork. Because Yield Spread Premium is a common reason for losing your rate lock, here is the insider scoop on this odd sounding term. Questions to Ask BEFORE You Lock Ask Kate about locking - Ask a question and get an answer from Kate. Search Readers' questions and Kate's answers at Mortgage Rate Lock Center Home from Locking Help to Get-Your-Best-Mortgage-Rate Didn't find what you're looking for? Here's more help!Tip: You can also use this toolbar for searching. Enter your subject and you'll be instantly guided to the mortgage information you're seeking.  Custom Search Bookmark And Share Yield Spread PremiumBookmark this page in your favorites for easy reference. Use the buttons you see below to share Yield Spread Premium - Say What? with your friends.
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