The origination fee can vary from lender to lender. What did your agent tell you? One thing you could do is call various other lenders and ask them what their loan origination fees are so you can compare. This is always a good idea before you chose a mortgage person so you can compare apples with apples.
Best of luck.
Rich Bennett, Realtor
Zephyr Real Estate
You cannot just consider origination fee alone when getting a loan from a direct lender or a mortgage broker. Going directly to a bank you may not get charged an origination fee but they may charge you discount points to get a certain competitive rate. Or their interest rate will simply will be higher than you could get with a mortgage broker. You might save the $1400 origination fee but you will pay many times that if your rate is even half a percent higher over the course of the mortgage loan.
What I have found is that a good mortgage broker (who can shop your loan around) can almost always get you a lower rate than if you go with a direct lender. The money he can save you can be as much as $10,000 even over the first 10 years of a mortgage loan. Saving THAT much money is always worth the $1400 origination charge that the broker will charge you.
Here is an example:
I just looked up the rates on a big bankâ€™s website (Bank of Somewhere) today 12/21/2011. For a $250,000 mortgage loan they are showing a 30 year mortgage can get a rate of 4.125% with .875 points. Those points on a $250,000 loan will cost you: $2,187.50. (250,000 x .00875). While they are not calling it an origination fee they are still charging you $2,187.50 to get a loan with an interest rate of 4.125%
As a mortgage broker, I have a lender that I work with whose rate today is 3.625% for a 30 year fixed loan. There are NO POINTS to get this rate but I may charge an $1875 origination fee. Already by going with a broker (as in this scenario) you are saving $312. (2187.50 â€“ 1875).
However, the real savings will come after you realize how much that Â½ a percent in interest rate is going to save in 10 years.
A payment on a $250,000, 30 year fixed loan at 4.125% is $1,211.62 a month (principal and interest).
A payment on a $250,000, 30 year fixed loan at 3.625% is $1,140.13 a month. (principal and interest).
That is a difference of $71.49 a month. Or, $857.88 in one year. And, $8,578.80 in 10 years. And finally, $25,735.40 in 30 years.
So, by paying attention more towards who can get you the LOWEST RATE, rather than what the origination charge or points makes much more financial sense when shopping for a loan.
I hope this helps you make a good choice in financing your loan.
As a rule, origination fees are dependent on the loan amount ranging from 1% to 4% of the loan amount. To better understand how a loan is priced and what your ultimate rate may be from lowest to highest is one of the pages I have on my website for borrowers like you can be more informed to arrive at their ultimate decision. "Risk Based Pricing" can be found in Chapter One on my website. Link is provided below. Best wishes.
Happy holidays, Rudi
You can shop for a mortgage and get that with whomever you want (Federal law!).
Maybe the real estate agent was being conservative with the costs (which is a good thing).
You can get a live rate quote from my site at usloans.com
Licensed by the California DRE #01507615
- It varies from mortgage broker to mortgage broker
- There is a possibility of no fees are associated if you can get a loan directly from the lender
- If you are using a mortgage broker, fees can range from 0.5% to 1% of the loan amount.
Generally, shop the loan around to ensure competitive pricing on fees and rates.