How Do You Understand Yield Spread Premium?
Understand yield spread premium can and will help you to save thousands of dollars on your mortgage and loan payments. The concept of yield spread premium is a little bit difficult to grasp, but with a few simple definitions you will be well on your way to understanding the true meaning of yield spread premiums. Get a definition of Yield Spread Premiums. You can understand the concept of the yield spread premium like this: a yield spread premium is what happens when a loan is sold for a rate that is higher than “par.” For instance, if a loan would normally have a 6% interest rate and the mortgage broker sells it at a 7% interest rate, the mortgage broker has achieved a yield spread premium of 1%. Know that while some regard yield spread premium to be a scam carried out by loan agencies and mortgage brokers, the practice of including a yield spread premium in loan interest rates and mortgage interest rates is legal and commonly practiced. Be aware that if your mortgage has no direct upf
