If you understand mortgage terminology and can talk the lingo your loan originator will be less likely to try and take advantage of you. It helps to know what you are talking about when shopping for a mortgage loan. Here is a collection of mortgage terms to help you on the right path when refinancing your home loan.

Discount Points: This is prepaid interest you will pay at closing in exchange for a lower interest rate. Be careful when paying points up front as this fee is often misrepresented and paid to the loan originator as a bonus without any benefit to you.

Origination Points: This is the fee you pay the loan originator for preparing your mortgage loan. A reasonable origination fee is 1-1.5% for a home you are living in.

Yield Spread Premium: This is the commission your loan originator or broker receives when they sell you an interest rate that is higher than you actually qualify. When shopping for a mortgage loan, make sure you receive quotes that do not include YSP.

Good Faith Estimate: Often referred to as the GFE, this document is required by Federal law and discloses all terms and fees associated with a loan. This is an estimate and is only as trustworthy as the broker or lender that creates it.

Junk Fees: This is any fee that violates RESPA. Examples of junk fees include broker “administration” fees, application fees, lock fees, and loan submission fees.

Third Party Fees: These are additional fees incurred when originating your mortgage. Examples include appraisals, loan underwriting, legal fees, and anything else included when closing on your mortgage. These fees are commonly overcharged to boost the profits of your loan originator.

Loan to Value Ratio (LTV): Your loan to value ratio is determined by dividing your loan amount by the value of your home. Loan to Value ratio is an important part of determining your interest rate.

You can learn more about refinancing your mortgage and avoiding common homeowner mistakes by registering for a free mortgage guidebook.