2007-01-29 02:17:55 · 9 answers · asked by Karen E 1 in Business & Finance ➔ Renting & Real Estate
It's a percentage of the loan amount that the mortgage company makes. It's paid from the lender directly to the mortgage broker. You don't pay for it out of your closing costs, but you pay a higher interest rate for it.
2007-01-29 02:27:00 · answer #1 · answered by Anonymous · 0⤊ 0⤋
this is the compensation to a mortgage broker from a wholesale lender.
That is Extra money paid by a mortgage lender to a mortgage broker as a bonus often represented as a percentage of the original loan balance. Typically, if a lender is paying the broker a premium bonus, it's because the broker left "money on the table" in the deal. This money the lender is paying the broker, well, it could have gone to the borrower in the form of an interest rate reduction or fee reduction or both. Instead, it goes into the mortgage broker's pocket!
I work as a Business Analyst for a Huge bank in their Home Equity division. Typically YSP is at the rate of 2% of loan amount.
2007-01-29 02:26:57 · answer #2 · answered by FC Arsenal Fan 2 · 0⤊ 0⤋
The Yield Spread Premium is what the investor pays the lender for delivering a loan at a given rate. That given rate is normally higher than the prevailing "par" ( no discount points) rate.
Lenders price their loans to be profitable and have delivery contracts with mortgage loan investors such as, but not limited to, Fannie Mae and Freddie Mac that specify the rate at which they will buy the loan. At the same time they must price themselves to be competetive within their market and against their competetors in that market.
In addition, some loans are more highly priced than others. For instance, a borrower who can supply full acceptable documentation of their income and assets is more likely to get a lower rate on the same product than someone who cannot supply the same documentation for qualifying purposes.
Because of the Yield Spread a lender can offer both borrowers the same rate using the yield spread premium to pay the additional investor costs. With certain limitations, the yield spread premium may also be used to apply towards borrower's closing costs.
Yes, there are lenders out there who will price a loan to a borrower in such a manner that the loan officer is paid the yield spread premium as income but in a competitive market with borrower's who shop and compare not only rates but service history, that is becoming more difficult for them to get away with.
I cannot see any reason why a refinancing borrower should agree to accept any more than the "par" rate as they will not benefit from a higher rate unless they are asking for a no fee or no cost refinance. If that is the case, the loan officer may be pricing the loan to cover those costs.
2007-01-29 03:20:14 · answer #3 · answered by Anonymous · 0⤊ 0⤋
No, you are NOT getting a good deal. YSP means yieldspread premium (what your broker is being paid charging you a higher rate), which is included in the RATE, not the APR. The APR is the "true cost" of the loan, and includes pre-paid finance charges on the front end of the loan. Basically, the loan officer is getting you on the front and the back. Sounds like they are charging you about 4 points total, which is probably the only reason they took your loan FHA. Check the following fees, and tell the lown officer to DROP THE FEES, or DROP THE RATE, or go to someone else for your financing: Origination Fee Broker Fee Application fee (only applicable in some states) Credit report fee (ask to see the invoice, this is a 3rd party fee and you can only be charged what the broker incurred) All of these fees will be included on the top section of your good faith estimate (known as section 800, see the numbers on the left side) Your best bet, take that GFE and TIL (good faith estimate and Truth in Lending) to another broker and see if they can beat the deal. I bet you'll find something better if you do! :-)
2016-03-15 01:46:35 · answer #4 · answered by Anonymous · 0⤊ 0⤋
It's money paid by a mortgage lender to a mortgage broker as a bonus, usually as a percentage of the original loan balance. The lender is paying the broker, but the borrower could actually get it in the form of an interest rate reduction /fee reduction or both. It's usually around 1.5-2%.
2007-01-29 02:24:55 · answer #5 · answered by Christopher C 3 · 0⤊ 0⤋
Typically, lenders will pay a "small fee" to a broker if they upsell the rate to the borrower. This is YSP and is a fee paid out the back in addition to the broker fee paid upfront.
2007-01-29 03:37:36 · answer #6 · answered by boston857 5 · 0⤊ 0⤋
thank you! Extremely informative and gives me better knowledge on the subject
2016-08-23 16:33:46 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Yeah it might be correct
2016-07-28 08:04:08 · answer #8 · answered by ? 3 · 0⤊ 0⤋
Best bet save the money and refinance with a brick and mortar bank!!!!!!!!!!!!!!!!!!!!!!!
2007-01-29 04:59:46 · answer #9 · answered by Paul V 6 · 0⤊ 0⤋