Simply compare bank rates to those offered by a wholesale mortgage broker and you will quickly understand why bank originated mortgage loans are a bad idea. Banks do this because they will receive an additional two points, or 2% of the loan balance, when the mortgage is sold on the secondary market. If you are considering mortgage refinancing with your bank there are several things you need to know to avoid making an expensive mistake. Banks fund their loans with their own money before selling the mortgage on the secondary market. Louie Latour specializes in showing homeowners how to avoid common mortgage mistakes and predatory lenders. You can learn more about refinancing your mortgage while avoiding costly mistakes with a free mortgage tutorial. Here are several tips to help you avoid overpaying for your next mortgage. But you need not be an expert at real estate laws. If you’re familiar with Yield Spread Premium, you know that mortgage companies and brokers mark up your mortgage rate to receive a bonus from the wholesale lenders. Banks know that loans with above market interest rates bring them a premium profit at the homeowner’s expense. To get your hands on this "Mortgage Refinancing Toolkit," which teaches strategies for finding the best mortgage and saving thousands of dollars in the process, visit Refiadvisor.com. If you want to try your hand at this business, visit your local bank and have someone explain to you how buying a foreclosed property works. Because your bank is exempt from RESPA laws, the bank will never tell you how much your mortgage interest rate has been marked up. Banks do the same thing to make money selling the loans on the secondary market. You have good credit and meet every requirement to qualify for a 6.00% interest rate on the wholesale market. These brokers charge a flat origination fee for their services without inflating mortgage rates like the banks. When a bank seizes a property, it sends out a notice to the owner. Banks earn a premium on the secondary market by charging Service Release Premium, and here’s how it works. Your loan representative will show you the bank’s rate sheets and swear the interest rate isn’t marked up; however, if you check Fannie Mae’s weekly yield you’ll see the bank’s markup clear as day. If you’re considering refinancing your mortgage with a bank, you need to read this article. Most bank employees have never heard of Service Release Premium and have very little knowledge about the mortgage industry as a whole. They will swear to you that the interest rate is not marked up in any way and even show you the bank’s rate sheets. Thanks to the Banking Lobby this law was changed to exclude banks. But you need not be an expert at real estate laws. Your loan representative will show you the bank’s rate sheets and swear the interest rate isn’t marked up; however, if you check Fannie Mae’s weekly yield you’ll see the bank’s markup clear as day. After closing your bank will turn around and sell your loan on the secondary market for a profit. If you’re familiar with Yield Spread Premium, you know that mortgage companies and brokers mark up your mortgage rate to receive a bonus from the wholesale lenders. While it’s true that bank mortgage loans are convenient, there are a number of compelling reasons for avoiding your bank all together. Banks mark up wholesale interest rates to boost their profits when selling your loan. To get your free mortgage guidebook visit RefiAdvisor.com using the link below. This is the retail markup of your mortgage interest rate when you borrow from a wholesale lender. Banks make the majority of their profit by selling your home loan to the secondary mortgage market.