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Yield Spread Premium (YSP) has been the source of recent debate in the mortgage industry.
The yield spread premium are the points paid by lenders to brokers
for loans carrying interest rates above a par rate (a rate at zero points). It is also the
lender charging points for rates below the par rate. The yield spread is one of the ways
brokers receive more money for each loan. They will quote a higher (than par) rate and
in return receive money back from the lender. In this case the lender will pay the broker
points for booking their customer into a higher interest rate. The YSP are also the points
you pay when you are attempting to buy down your rate. The excess points charged by the
broker go to the lender so that you can receive a lower rate.
The table above is a sample of a rate sheet that brokers use to determine interests rates on a daily basis. The 30 day lock period is the industry standard when quoting interests rates. Using this period of time on a hypothetical mortgage, borrowers can decide if they want to pay .375 (the difference between 100-99.625) for an interest rate of 6% OR receive .35 (the difference between 100.35-100)for a rate of 6 1/8%. As you can see the rate with a quote of 100 would be the par rate. On a hypothetical loan of $150,000, you would pay an extra $562.50 for the 6% rate or receive $525 for a rate a 6 1/8%. At Syndicate, you decide how much you want to pay for the loan and what interest rate you receive, your costs will not change. Our flat fee pricing allows you to pick the rate (along with the corresponding charges or rebates). That's why we quote two rates, one on each side of par.
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