Delete This Page

Are you sure you want to delete this page? Once you delete this page it cannot be retrieved.

Publish This Page

Are you sure you want to publish this page? Once you publish this page it will appear on the site.

Views: 3146

Yield Spread Premium

A percentage of the loan amount, the Yield Spread Premium is what a lender pays a broker for a loan with a higher interest rate, and lower fees.  It can be defined as "negative points" because the lender pays the mortgage broker for the higher rate.  It is an effective way to reduce your closing costs if you are holding the property for a short time period.


YSP or "Yield Spread" is usually built into the rate by the broker charging a higher rate at different levels to be paid more by the bank doing the loan and is disclosed at closing on the HUD statement.  You may find yourself paying more for the loan with YSP versus paying a lower rate not including YSP.


Direct Lenders earn a "Servicing Release Premium" as they lend their own money and may or may not sell the closed loan paper on Wall Street for servicing after the loan has been closed.  This is a very common practice. Essentially, servicing release premium is to correspondent lenders what yield spread premium is to mortgage brokers.


Related Links

Saving changes
  • Last edited November 20 2008
  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Contributors to this article include: