A Yield Spread Premium (YSP) is the 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 YSP (an interest rate above the market rate). The YSP is listed on the Loan Estimate and Closing Disclosure. A YSP isn’t always a bad thing for the borrower because it reduces the upfront costs of a loan. But the buyer should be sure to review all documentation before signing any contracts.

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