Profile picture for Alex112

do i have to pay yield spread premium and why?

  • March 06 2011 - West Hollywood
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Answers (4)

Best Answer

Profile picture for Bentley Advisors
In the new regulatory environment, YSP is credited to you by lender but then charged upfront as origination fee. It's a wash and from a "fee" perspective, it doesn't cost you out of pocket. With that said, although it's a wash from a "fee" perspective, you are essentially paying for it in the likely form of a higher rate. The higher the rate, the higher the YSP and vice versa. Your mortgage pro should have structured the deal based on your specific circumstances. Determination should be based on things such as whether rate is a priority or low fees...your time horizon in the home...breakeven analysis on "points", etc. 
  • March 06 2011
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  • May 13 2013
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In your GFE you might see box 2 as a lender paid credit or borrower credit for rate chosen which the bank pays on your behalf if you are working with a broker.

  • March 06 2011
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You, the borrower, do not pay Yield Spread Premiums.  Yield Spread Premiums are paid by the Lender, which goes any possible price adjustments, or be used as a No Point Loan.  If it's at par pricing, which means no Yield Spread Premium (YSP) is paid, then there is typically a Loan Origination fee (Points).  If you're looking to buy the interest lower from the par pricing, then you can expect to see an additional Discount Fees (also, part of Points).  Points are a percentage of the loan amount.  One Point will equal One Percent.  Hope this helps your understanding.
  • March 06 2011
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