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What is Yield Spread Premium

Compensation a lender pays a mortgage broker to sell a loan with a higher interest rate. Unless a borrower pays an origination fee for a mortgage loan, they most likely will pay a yield spread premium (an interest rate above the market rate). The yield spread premium is listed on the Loan Estimate and Closing Disclosure. Yield spread premium isn’t always a bad thing for the borrower because it reduces the upfront costs of a loan. Review all documentation before signing any contracts.