How To Get Money Back At Closing When Choosing A Loan
Im pretty sure you dont know what Yield Spread Premium (YSP) is. It is hidden in most mortgage transactions until the closing statement is presented and home buyers are ready to close escrow and complete the home buying process. I didn’t know what is was either. Even with “truth in lending” and good faith estimates, you’re probably going to miss the YSP. THe problem is, when you pay YSP, you pay it over the life of the loan… more on that later.
I’m a computer programmer and I was brought onto a project to create a transparent mortgage tool to help consumers get a fair, honest loan. The really cool thing about the project was the main goal was to take the hidden YSP, that normally goes into the pocket of the mortgage broker, into a rebate back to the consumer. The consumer can then use that rebate towards closing costs.
I look at some old records and found a closing statement that had YSP at over $3,800. I didn’t even realize that I paid it. Probably because I didn’t write a check for it. It was wrapped up in the loan, so for the next 30 years I will be paying interest on that $3,800… which will double or triple the amount owed. That is when it hit me that giving that money back to the consumer is a really good idea. Image what you will do, if on your next home loan you can get $3,800 or more back that you can use.
Our nations current economic conditions has made the consumer demand transparency in mortgage services,. So next time you get a mortgage, simply ask that mortgage broker if they are a member of the Transparent Mortgage network, and even if they are not ask if you can get the YSP as a rebate that you can use towards closing costs to help you secure your house.