Origination Fee or Yield Spread Premium - What Are They?

Описание: When you're in the process of buying a property, you will come into contact with a lender who'll want a yield spread premium or an origination fee. What's that?! The person helping you with the loan is going to get paid. You get to decide how you want to pay them.

With the lending rules of yesteryear, mortgage brokers either get paid directly from the borrower (you) or from the lender (still from you, but you pay it in a different way).

If you want to have a lower interest rate, you'll pay an origination fee. It's the fee you have to come up with on top of the down payment and other fees you're paying for. For low-no fees, you'll choose the yield spread premium, which essentially spreads the origination fee over the course of the loan. The broker gets paid by the lender at closing and you pay the lender over the course of the loan.

So if you know you're only going to hold the loan short term, you will likely want to have a YSP instead of an origination fee. If you'll hold it long term, you'll save more by paying the origination fee up front and enjoy the long term lower payment.

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