Fast talking mortgage broker: 1% origination fee?

HardDrive · 01-16-2009, 03:12 PM

So I am looking to refi, and I call this broker. I already don't like her because she is trying to talk as fast as possible and throwing out as much technical minutia as possible so that she slip in a passing comment about her 1% origination fee.

What kind of fees should I be looking at? What should I expect to pay the broker (should I pay a broker?)?

Our loan to value is about .43 on a bad day. One outstanding car loan (at 1.9%, thank you MB credit), no other debts. Good credit. Pay off CC every month.

30/10 ARM @ 5%.

Want a 15 year fixed, obviously at the best rate possible. Balance is around $350k.

Any thoughts, comments or suggestions most appreciated.

Zeke · 01-16-2009, 03:17 PM

The business section of your local newspaper will have points and rates once a week. I'd say 1 point today isn't bad, but I've seen slightly less. You really have to get to the bottom line and not worry about single line entries. Someone pays for the various reports like appraisal and credit check. Doc fee and so on. It's gotta come for somewhere and they have to tell you where.

Just don't fall for junk fees. Google that.

Porsche-O-Phile · Porsche-O-Phile's Garage

One point origination is standard for certain types of loans (like FHA) but can be talked down for other types and refis. Shop around. Get a couple of banks into a bidding war for your business. Good luck.

RWebb · RWebb's Garage

buying a house is a like a feeding frenzy for parasites...

but some of it cannot be avoided.

blk911 · 01-16-2009, 04:21 PM

Right now you should be able to get 4.5-4.75 on a fifteen year fixed with 1 point origination. You can always ask for a rate with no origination and no discount point. How long do you intend to live in the house? If less than say 5 or 6 years, not worth it to pay points usually.

Porsche-O-Phile · Porsche-O-Phile's Garage

Points are tax-deductible too - something else to consider...

There also is a $7500 tax incentive (a credit, not just a deduction) for buying a home between now and June. Here's some info:

http://www.federalhousingtaxcredit.com/faq.php

Between this and an origination point, plus one or two to buy down the rate, you could be in a VERY nice position come April of 2010... Just something to consider.

HardDrive · 01-16-2009, 06:02 PM

Yeah, were a little hesitant, because we are also looking at houses. Some really nice property coming on the market, and the prices just keep creeping down.

strupgolf · 01-16-2009, 06:28 PM

Quote:

Originally Posted by Porsche-O-Phile

Points are tax-deductible too - something else to consider...

There also is a $7500 tax incentive (a credit, not just a deduction) for buying a home between now and June. Here's some info:

http://www.federalhousingtaxcredit.com/faq.php

Between this and an origination point, plus one or two to buy down the rate, you could be in a VERY nice position come April of 2010... Just something to consider.

Wait a minute folks. In a little noticed section of the new 350 billion stimulas package just passed today, this $7500 credit will NEVER have to be repaid. Thats right sports fans. Buy a house before July 1, 2009 and the taxpayers will GIVE you all this money that we/they/us dont have. Can you see the start of the "redistribution of wealth" with the new Obama plan. I can and I'm sick of it.

Big Ed · 01-16-2009, 06:41 PM

HardDrive,

I am a real estate broker, so I've seen loans ranging from great to awful. From my experience, the best advice I can give you is to shop the loan to a small community bank in your area. Around here, they are more conservative lenders but from your description of your position that shouldn't be a problem. What I've seen is that the small banks have competitive rates and the lowest fees, and that is why my mortgage is in a small bank.

Good luck.

Mike

Porsche-O-Phile · Porsche-O-Phile's Garage

At least this "stimulus" goes to people who waited until after the bubble and not the boneheads that bought during it.

Don't look a gift horse in the mouth.

911Rob · 911Rob's Garage

I only pay MAX 1% point for shark loans; standard, conventional financing is 0% points!

Shop around imo, but I'm Canadian 'eh?

Porsche-O-Phile · Porsche-O-Phile's Garage

Depending on one's particular goals and/or how long they plan on staying in the loan before either selling or refinancing, paying points might actually be the way to go. Or not. You've got to run the math/scenarios to determine whether or not it makes sense.

I think that looking at this issue quantitatively rather than emotionally is the correct way to go. Simply dismissing the idea of paying points because one "doesn't like them" is potentially leaving a lot of money on the table long-term if they stay in the loan long enough to glean the extra benefit of buying down the rate... In most cases, people either sell or refi before they get to this point, but not always - and the average "time-to-refi" of 4-5 years is likely to climb dramatically as interest rates rise and credit markets continue to freeze up. Just something to consider going forward - if it were me, I'd expect on being in a place at LEAST 10 years before doing anything, but it varies person-to-person. Point is, one has to look at it analytically rather than just "shooting from the hip" and taking a W.A.G. about it.

Big Ed · 01-17-2009, 04:45 AM

Quote:

Originally Posted by Porsche-O-Phile

Depending on one's particular goals and/or how long they plan on staying in the loan before either selling or refinancing, paying points might actually be the way to go. Or not. You've got to run the math/scenarios to determine whether or not it makes sense.

I think that looking at this issue quantitatively rather than emotionally is the correct way to go. Simply dismissing the idea of paying points because one "doesn't like them" is potentially leaving a lot of money on the table long-term if they stay in the loan long enough to glean the extra benefit of buying down the rate... In most cases, people either sell or refi before they get to this point, but not always - and the average "time-to-refi" of 4-5 years is likely to climb dramatically as interest rates rise and credit markets continue to freeze up. Just something to consider going forward - if it were me, I'd expect on being in a place at LEAST 10 years before doing anything, but it varies person-to-person. Point is, one has to look at it analytically rather than just "shooting from the hip" and taking a W.A.G. about it.

You are confusing discount points and origination fees. A discount point buys you a lower note rate -- and in that case, the analysis you suggest makes sense.

However, in HardDrive's case, the mortgage broker has quoted him a 1% origination fee, which buys him...a higher commission for the mortgage broker.

berettafan · 01-17-2009, 05:56 AM

When an inefficient entity (gov't for example) creates an opportunity for financial gain the scumbags will step in and do everything they can to shift this gain to themselves and away from those it was intended to assist.

Zeke · 01-17-2009, 09:22 AM

Big Ed, I don't know of too many banks that want to tie up money for 30 years. I'm sure there are exceptions. Most loans go to the secondary market, not that I'm telling you anything new. So, for all the paperwork and what not, plus a commission paid, the money has to come from somewhere.

You might come back at me and say a bank itself doesn't need a commission, but they do have expenses. If they hold the loan for 60 days and sell it, they might not make any money BUT the point(s). Your local banker would be careless if he charged a bunch of junk fees.

Don't get me wrong, I don't feel sorry for any bank. Just being realistic.