Financing in 11520>Question Details

tbert6, Home Owner in 11520

Last minute closing fee of 1700 in points. I have to purchase points and take lower interest rate or bank will not go through with loan

Asked by tbert6, 11520 Fri Oct 12, 2012

Refi closing costs incl unexpected 1.666 pt fees not originally quoted. I am not living in my house but am renting it out. Does NY State have mand law req purchase of pts? Rate is (3.25%) 1700 pt fees vs no-cost @3.5% int rate.

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tbert6’s answer
The loan is for a 15-year, not 30. I will ask for the debt to income ratio. I'm set to close this Thursday.

What you're saying makes sense because without the rental income, I do have a relatively low income (30k yr), and when it went to underwriter I was asked for additional income verification. I owe 91k on single family house that appraised @ 268k and I am not taking out any cash - just re-financing for a much lower interest rate. I was one of those people that went frome 65k year income to less than half that during the last few years.
0 votes Thank Flag Link Tue Oct 16, 2012
To meet the DTI requirements you may want to consider a 30 year and just make the 15 year payment. Thus allowing you qualify without having to buy down the rate.
1 vote Thank Flag Link Fri Feb 8, 2013
You need to ask your originator as to what your debt to income ratio is. The added discount fee is accompanied by a decreas in rate so it is not a bogus fee of any sort and like Trevor mentioned that price point is outstanding
or without the loan discount fee. Other than it being a great opportunity for you to have one of the lowest rates in the history of man for an investment property, it isn't as though you are being taken.

My assumption is after final income verification when the loan went in to the undewriter for a "clear to close" or final review that your debt to income ratios were outside of guidelines and they were forced to discount or "buydown" your interest rate to a lower price point that would keep your monthly housing obligation low enough to pass the final review.

James Gaffney
Residential Mortgage Division LLC
An Affiliate of Wells Fargo Home Mortgage
NMLS #38440
1 vote Thank Flag Link Tue Oct 16, 2012
Very helpful, thanks so much.
Flag Fri Feb 15, 2013
That doesn't sound right to me. It's an investment property and so it has to be a lower rate? Regardless if its an investment property or not, you always have the option of a rate without paying discount points. The only way possible this can make sense is if for some reason your debt to income ratios are that tight that there is a need for a lower rate in order to make the ratios work. If I were you, I would ask for a copy of the application and make sure that the property is being held as an investment property. That right there doesn't even sound right!
1 vote Thank Flag Link Fri Oct 12, 2012
Most of this closing fees are deductible when you file next year. So, they are giving you a great deal on this investment property at 3.25%.

Best of Luck,

Maria Cipollone
0 votes Thank Flag Link Wed Jun 12, 2013
I agree with Javier: something sounds very WRONG about this whole thing.

First: that interest rate---if it's a 30yr Fixed rate---is UNBELIEVABLE for an Investment loan in current market conditions.

Second: Do what Javier said: get a copy of the loan application before you go any further. Is the box checked for "Investment" on Page 1 of the application?

Have you checked the Licensing of this company AND the original Loan Officer AND the Loan Officer who is now handling the file (if it's a different person from the original) AND the name of the Loan Office that appears on the last page of the loan application.

Go to to verify each and every one of these Licenses. Very important that you ALSO verify "Authorized To Do Business" at the bottom of each License page to verify that the Licensee is Authorized in New York State. Just because they are Licensed doesn't mean they are permitted to originate loans in New York State. You must conduct this due dligence because something sounds very wrong about this whole shenanigans.

Let us know how you're doing.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
0 votes Thank Flag Link Fri Oct 12, 2012
Thank you so much for your quick responses, I appreciate it. I did check with my original good faith estimate and there is no mention of 3.25% + points in it. I was originally quoted 3.5% no points and that's in the good faith estimate. The bank is saying they will only close with the 3.25% + points because it is not my primary residence. They are refinancing with the property based as investment property which is more of a risk, hence the need for points. I believe my original contact just wasn't knowegeable about this kind of loan, and as the loan went further up the ladder the change was made. I am refinancing out of two loans, one is 5.15 and the other (line of credit) is 8.28 so I am really saving alot. I checked out 3 other banks and none of them came close to 3.25%.
The new good faith estimate does not contain a change of circumstance, its a whole new document.
Thanks again for your responses - they really helped me
0 votes Thank Flag Link Fri Oct 12, 2012
Good morning tbert6,

First: unless the interest rate interferes with your ability to qualify, then you don't HAVE to pay points. You have the option of accepting the new, higher interest rate with no points.

Second: You should be wary of any Lender who has a "last minute" closing fee of any kind. You might want to consider speaking to another Lender before you agree to close with the current Lender. Your Loan Officer should have kept you up to date with pricing changes in the event pricing would be different from the original quote.

Third: have you compared the new "last minute closing fee" to your original Good Faith Estimate of Closing Costs? Was it on there? If not, have you received a revised GFE with a "Change of Circumstance" form?

Last: New York State has no law regarding points.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
0 votes Thank Flag Link Fri Oct 12, 2012
Aslo keep in mind, from the time you started to talk to your loan officer, to the time that you guys lock the interest rate, it is very possible that the costs to have a specific rate may have changed in that time. Rates are like the stock market, they change daily, sometimes even multiple times a day.

It's possible that your loan officer quoted you at 3.25% with no points at the beginning, and because you didn't lock at that moment, you're subject to today's pricing.
0 votes Thank Flag Link Fri Oct 12, 2012
It's not a law that you buy points. But it's how it works. You're paying a fee, which is the 1.7 points, in order to obtain a 3.25% interest rate, which is lower than what is available to you at no fee, in this case the 3.5%. What shouldn't be happening is that these fees are unexpected. You should have signed some new disclosures on the new fees prior to even setting a closing date. So you should be aware of this before you get to a closing table.

It sounds like ot me is that you're close to setting up a closing date and just now you and your loan officer talk about the rates and discount points, so it's catching you off guard. This is normal and it's always an option for borrowers to pay additional points to get a lower rate.

One thing that does stand out to me is that you're paying a 3.5% for an investment property? Are they financing this as your primary? Because this rate sounds very low for an investment property.

Good luck!

Javier Meneses
NMLS #23130
Senior Loan Officer
Sterling National Bank
0 votes Thank Flag Link Fri Oct 12, 2012
Hello. First & foremost, congratulations on your decision to buy a home. It is an excellent time to do so. To answer your question, points are a one time charge that are paid at the closing table by the borrower. One percent is equal to 1% of the loan amount. This fee should have been no surprise because they should have quoted it to you when you got pre-approved.

You do not have to purchase points. The Lender charges points, which you will have to pay at the closing table. Again, it is a one time fee, and is dependent on the lender. Not every lender and/or loan comes with points. Consider consulting with a Mortgage Advisor for more information.

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.

Wishing you the best of luck,

De Vonte Williamson
Licensed Real Estate Salesperson
Proudly Serving Long Island
Coldwell Banker Residential
Mobile: (631)384-3695
"I Stand Behind Getting You Results!
0 votes Thank Flag Link Fri Oct 12, 2012
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