The yield spread premium (YSP) should not be a mystery to any home buyer or home owner considering a mortgage refinance.  This includes obtaining your mortgage from directly from a bank or from a mortgage professional.
When a mortgage broker or banker sells a mortgage loan above the par rate, or the lowest interest rate a borrower qualifies for they can be compensated in the form of a yield spread premium. This is how interest rates are determined for most conventional mortgage loans.  If 6.50% is a par delivery, then 6.75% may be paying the mortgage broker or banker a yield spread premium of about 1.00%.

One of the largest mortgage industry issues is that bankers do not have to ever disclose the amount of yield spread premiums they will earn for the interest rate they have provided.  Whereas a mortgage broker must disclose this income upfront and on the HUD-1 Settlement Statement.  I personally wouldn’t have a problem if banks were providing lower or par interest rates to their clients.  But this simply doesn’t happen.

Don’t forget the advantage of having a mortgage professional assist with your home financing needs.  Mortgage brokers not only help with all of the application paperwork, they truly are advantageous in finding the mortgage program that best suits your specific financial situation.  If you need help with Florida mortgage questions please feel free to contact me anytime.

Stephen Thaggard 

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