Yield Spread Premium

A Yield Spread Premium (YSP) is a fee that a mortgage broker or lender can earn when they help a borrower secure a loan with a higher interest rate than the lowest available. Essentially, if a borrower agrees to a slightly higher rate, the broker earns a commission from the lender, which can reduce the borrower's upfront costs or interest payments. While this can benefit some borrowers by lowering initial expenses, it’s important to understand that choosing a higher rate may lead to paying more interest over the life of the loan.