The home refinance mortgage loans that comes under the making home affordable program is meant for struggling homeowners who are unable to repay the original mortgage loan to financial crisis or sudden increase in the interest rates and are given a chance to refinance their mortgage loans to a lower amount so that the monthly loan amount is affordable and doesn’t cripple ones ability to lead a normal life.
By applying for a mortgage refinance home loan one not only takes a step towards saving ones home but also helps oneself save a lot of money in the long run. Homeowners looking for the most affordable home refinance mortgage loans can actually ask for different mortgage refinance home loan quotes from various mortgage refinancing lenders just like one does while availing any other type of loan such as auto loan or home loan. A comparison of the mortgage refinance home loan quote enables the homeowner to finalize the lowest refinance mortgage loan. However, what one is not aware that when the mortgage refinancing lenders offer the free quotes they already include retail markup so the homeowners are actually choosing from the worst rates offered by the mortgage refinancing lenders. Let’s take a look at a few facts which every homeowner should know before they opt for home refinance mortgage loans.
- Selecting the lowest refinance mortgage quote is difficult as the quotes are not being offered by wholesale lenders but retail mortgage lenders which is why accessing the real rates becomes difficult for the homeowner. Securing wholesale mortgage rates on the mortgage refinance home loan is possible if the right broker can be identified who can refinance the mortgage loan at the lowest refinance mortgage
- Another very important fact to be known about home refinance mortgage loans is the term ‘yield spread premium’ This term suggests that once the specific wholesale interest rate approved by the wholesale lender reaches your mortgage broker or company they mark up the interest rate from what was specified by the wholesale lender and offers a higher rate so that the broker or the company can benefit from the commission provided by the lender. Hence, identifying the right mortgage broker or company who believe in work ethics and values more than minting money is important if one wants to reap the benefit of the lowest refinance mortgage loan. The mortgage refinancing lender can easily fool a homeowner by first charging the origination fees which is absolutely normal but also hiking up the interest rate from what was originally specified by the wholesale lender. This helps them secure not only the origination fees but also a higher pay or compensation due to the hiked up interest rate. If the wholesale lender approved an interest rate of 6.5% the broker or mortgage refinancing lender will hike it up to 7% and rake in the profit from the difference and the homeowner will be unaware of this snag even though the mortgage company should reveal the yield spread premium stated by the wholesale lender. But since their main motive is to rake in some profit the mortgage companies find ways to keep it a secret.
When you opt for mortgage refinance home loan with bad credit history it is known as bad credit mortgage refinance and mortgage refinancing lenders cater to bad credit mortgage refinance applicants more often than not as most of the applicants of home refinance mortgage loans have a bad credit history due to late payments or inability to make payments due to financial crisis. Hence, it takes a beating on their credit rating. However, even when applying for bad credit mortgage refinance loans it is important to be aware about the facts and tactics of mortgage refinancing lenders to further fleece you. So take time selecting the right mortgage refinancing lender and then go ahead with the lowest refinance mortgage loan.