| YSP is an acronym for Yield Spread Premium. This is | | | | it is paid on closing. Basically this means the borrower |
| the rebate that a lender will pay to a mortgage broker | | | | is paying a higher rate than what may otherwise be |
| in exchange for selling the interest rate above the | | | | available to them. |
| wholesale par rate. | | | | Many mortgage brokers will offer a "no closing cost" |
| This is probably best understood by using an example. | | | | loan product and use the funds from the YSP to |
| If the loan amount is $100,000 and the wholesale par | | | | cover closing costs. When applying for a loan with a |
| rate is 5%, if the loan is sold or the rate is sold at a | | | | mortgage broker, you should as a borrower ask the |
| 5.25%, there is a 1 point rebate to paid by the lender to | | | | broker how much the YSP is and use that as a |
| the mortgage broker. 1 point in this case is 1% of the | | | | negotiating tool to lower the cost of your interest rate |
| loan amount or $1,000. | | | | or possibly the origination fees or get some of the |
| There is some controversy related to YSP because | | | | closing costs covered. |
| there is incentive for brokers based on this rebate to | | | | There are a lot of lenders out there, so you do have |
| increase the interest rate more than what it "should" | | | | the option to be picky. Work with a lender you can |
| be. Consumers are typically not aware of this YSP as | | | | trust and ask for references where necessary. |