Mortgage Loan Origination Fees And Charges
February 12, 2010 by · Leave a Comment
You may wonder how many origination points you can legally be charged by your mortgage broker. The maximum fee cap varies from state to state. Wisconsin for example the broker is capped at 6% total commission. This means that you could be charged up to 6 points origination fee by your broker. This can also be split up between lender paid Yield spread rebates to the broker and origination fees.
Depending on your situation you may want to re-think the question. It isn’t how many points can I be charged but instead should be “how many points will I allow myself to be charged”? Many direct lenders charge a lot of points. One way to avoid being overcharged is to work with a broker or mortgage professional that is not a direct lender. Look over your good faith estimate and make sure your comfortable with the charges.
As a rule of thumb, 1% percent is what most reputable brokers will charge for an origination fees, if the loan falls within normal loan amounts.
Your loan officer is probably willing to work with you on how they make their money. For example, if you want lower closing costs, they may increase your interest rate to be paid yield spread from the lender that completely covers their fees. On the other hand, if you want the lowest interest rate, they may put all of their fees in ‘origination fee’, and you will pay for it out of your closing costs. Tell your loan officer what is important to you, and they should be willing to work with you on it. If not, you might consider finding a new one.
Not only does the maximum fee or number of points that a mortgage broker can charge vary by state, but it also varies by each lender. Each lender has their own policy in force that determines how much they will let a loan officer charge a customer. Many lenders are starting to cap the maximum points that can be charged to a borrower to 5%.
Usually, depending on the loan program, things such as points are negotiable. Very rarely will the number of points charged be at the maximum amount possible.
If you are wondering whether the mortgage broker you are working with is charging the maximum number of points allowed, you may consider working with another broker. However, there are situations that can exist, that would merit an unusually high fee (points) be charged for a loan. If you are wondering, call two or three other mortgage brokers and explain your scenario with great detail to see where your deal ranks with what they may be able to do for you.
Tips To Save On Mortgage Loan Fees
January 19, 2009 by · Leave a Comment
The first tip is to understand which fees are negotiable and which fees can be deleted. There will be lender related fees which may be negotiable and government related fees which are usually not negotiable.
Ask the broker to send you a copy of the good faith estimate and don’t be afraid to ask questions and demand answers for every penny listed on the estimate. ALSO, keep in mind that it is an estimate, and some of the figures can legally change before closing, so be sure to ask the broker which of those fees are constants, and which of the fees are variables.
Fees are generally broken into three categories: Fees associated with the Loan, Title/Government fees, and Pre-paids/Reserves. The title/government fees are standardized and will be the same regardless of who you do a loan with, so will the pre-paid/reserves. Only some of the fees associated with the loan can be negotiated.
In a purchase transaction the seller generally gets to choose the settlement agency and title attorney. Be sure to ask your mortgage broker to double check the fees being charged by the sellers chosen closing agents as this is often a source of dispute at settlement. If you think the fees are unreasonable you may be able to demand a neutral settlement agent be used.
Keep in mind that if you are able to negotiate a lower fee, you should keep an eye on the interest rate to make sure it does not increase. Some lenders will offset your savings on the closing costs by inflating your interest rate.
Using the same mortgage company (mortgage broker), the same title company and/or the same appraisal company to handle all of your mortgage financing can usually save you a considerable amount of money from fees being charged to you. Many mortgage brokers will provide discounts for you if you continue to use their services for all of your home financing needs along with possibly being able to negotiate lower fees from the other service providers involved.
A fee that is frequently overlooked is the notary fee. Many companies are now charging to have a notary signing agent come to your home to complete your loan documents. Typically the fee is around $350 to $450 for the service. The notary usually only gets about $75 to $125 of that fee and the rest is eaten up by the intermediate services. Ask to close your loan at the escrow company or contract your own notary by going to one of the notary signing agent bulletin boards like notaryrotary.com
The notaries are listed by zip code and their fees are usually posted on their profiles. Find an experienced notary near you and you may be able to save even more.
If you have questions regarding any of the fees you are being charged, do not hesitate to ask your mortgage professional what the fee is for. The only way you will know is if you ask. If you are being charged an application fee, ask if it is possible to get the loan without the application fee. Also, if you are being quoted X amount at one mortgage company, but you prefer another company, ask the other company if they are willing to match the closing costs if you were to bring in a good faith estimate. Often times they will, because they would like to have your business.
