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Yield Spread Premium (YSP) - Utah County Real Estate
Going through a mortgage broker is a very popular way to obtain a home loan these days. In fact, some industry insiders estimate that as much as 70 percent of all home loans are originated by mortgage brokers. This is probably the result of the unique function that brokers play in the market. Individual banks and mortgage lenders each offer a specific set of loan programs and terms. Brokers act as the middlemen for home buyers and lenders.  Brokers work with dozens of different lenders; allowing them to offer buyers a wider range of loans and helping them bypass much of the tedious shopping for the best mortgage rate.
Unfortunately, as with every industry, there are some brokers willing to take advantage of consumer ignorance. With brokers, this often happens in connection with the yield spread premium (YSP).  The YSP is the difference between the lowest rate a borrower qualifies for and a higher rate the borrower actually gets charged by the lender. For example, a broker finds a home loan for a borrower with a 6.0 percent interest rate, but both the lender and the broker would like to make more than that. So, without telling the borrower that he ... more

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