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If you are in the process of refinancing your mortgage loan, shopping smartly will help you avoid a fleecing by your mortgage company. Your Mortgage company works for commission and the more they get you to pay, the more money they make. Unfortunately, mortgage companies are rewarded when they con you into overpaying for your mortgage refinancing. This markup of your interest rate by the mortgage company is called Yield Spread Premium and avoiding it will save you thousands of dollars. Here are several tips to help you avoid paying Yield Spread Premium on your next mortgage loan.

Mortgage companies mark up your mortgage rate because the wholesale lender rewards them for overcharging you. The more you overpay, the more your mortgage is worth when sold on the secondary market. For every .25% you agree to overpay your mortgage company is paid 1% of your mortgage loan. This markup results in your overpaying thousands of dollars of unnecessary interest each year! The mortgage company receives this bonus in addition to the origination fee they are already charging you. If you agree to pay Yield Spread Premium you are actually paying double for your mortgage loan.

So how does Yield Spread Premium work?

Suppose your mortgage company tells you they can refinance your mortgage at 6.25%. What your loan representative isn’t telling you is that you qualified for 6.0% and they’ve marked it up to receive a bonus from the lender. If you were refinancing your mortgage for $250,000, your mortgage company pockets $2,500 in addition to the $2,500 you paid for loan origination! How do you avoid paying Yield Spread Premium? Ask your loan representative to see the rate sheet from the wholesale lender. This will tell you the exact mortgage rate you qualified for. If the loan representative refuses to show you this rate sheet you should find another mortgage company to work with.

You can learn more strategies for mortgage refinancing without overpaying by registering for a free mortgage tutorial.

Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com

Source: www.a1articles.com