Financing in 92101>Question Details

Jim, Home Buyer in San Diego County, CA

2% origination fee question.

Asked by Jim, San Diego County, CA Fri Apr 8, 2011

I am in the process of purchasing a condo in SoCal. It is 140k - I am putting 20% down and have excellent credit scores (790). When i got the GFE from my mortgage person, they started with a 3% origination fee but "discounted" it by a point, but 2% still seems high. They locked my rate on 03/30/11 for a 30 yr. fixed at 5% with impounds. Am i paying too much?

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I'm a little late in the game with this answer but hopefully it will add to piece of mind. What you have been quoted is fair for a condo. A 2% origination on a 140K loan amount is also reasonable.

If you are happy with the level of service you are getting, I would urge you to move forward. The only question I would have is if this is locked or not. If it's not locked yet, you need to follow up and make sure it's still available.
Web Reference: http://TripointMortgage.Net
0 votes Thank Flag Link Sun Apr 10, 2011
You could be, but you won't know unless you compare the same loan with a few different lenders. All of the info below seems plausible, but neither you nor I are loan experts, so contact a few, and see what they come up with. One lender may raise a question you never thought of, a question you can then ask the other lenders.

Of course you should be sure your lender will be able to meet your contract dates, that's a given. You're not going FHA, so your lender should have no problem closing in 30 days or meeting your contractual obligations. Ask lenders when the appraisal will likely be delivered to underwriting, what the underwriting turn-around time is, etc. I'm sure your agent will help you with this, but not all agents get involved or even understand the basic process. You may have to do it yourself this time.

I have an long established local lender I work with, as well as larger ones and brokers, for different circumstances, but my buyers are encouraged to talk to more than one lender, and I know we have lenders to fall back on should something happen in escrow. Usually my smaller lender can handle any issues that another lender can't, and handle it quickly. And if my buyers already spoke to them, they'll already be familiar with the fees. Fees will vary, so look at the bottom line of closing costs you'll need to pay out of pocket, and the monthly payment.

Good luck with this, and let me know if you'd like some lenders to call.

Cory
0 votes Thank Flag Link Fri Apr 8, 2011
Jim,

When it comes to a purchase, timing is a key issue. At the end of the day you want to do what is best for you so before you decide to take your business elsewhere please take into consideration the key dates associated with your transaction and confirm that if you do go elsewhere that you will be able to meet the financing and appraisal contingency removal dates and the close of escrow date. I suggest that you do not want to be in a position where you are unable to meet these dates and thereby potentially lose your ability to compete the purchase.

If I were in your shoes I would also take into consideration that at least from what you stated the broker that you are working with has disclosed what they offered to you, discounted and delivered on it. You then evidently accepted this offer. Perhaps it makes sense to move forward with what you agreed to.
0 votes Thank Flag Link Fri Apr 8, 2011
No you are not paying to much. The pricing ad for an 80% LTV is .250% - plus .750% for a Condo = 1..0% for property type and LTV plus 1.0% Origination for doing the loan. Have your agent break it down so you can see the actual cost of the loan. Your are locked and ready to close enjoy your new home.
0 votes Thank Flag Link Fri Apr 8, 2011
I just looked at my rate sheet from 3/30 and the 5% Conventional 30 yr fixed mortgage was paying in rebate 1.25%. Add the 2% origination fee to the 1.25% and you have 3.25% in total compensation before adjustments. Your adjustments are made by Fannie Mae and Freddie Mac in the form of pricing and are standard to any mortgage company out there. You have an adjustment of .75% for a Condo with a higher than 75% Loan to Value (LTV) and an adjustment of .25% for a Credit Score of higher than 740 combined with a Loan to Value (LTV) of 80%. There should be no other adjustments.

5.00% 30yr
Origination 2.00%
Rebate 1.25%
subtotal 3.25%
Credit score - .25%
Condo <75% -.75%

Total 2.25%....................not a bad deal!!

If you want to reduce the loan origination you can always raise the rate and the difference from a 5.0% rate and 5,25% is $17/month on a $112,000 loan amount.

I tell my clients that if the monthly payment difference is less than a really good large pizza vs. the upfront costs go for the higher interest rate. Besides think about the calories you will save by not hacing that pizza.

Your lender may have different pricing than I do but I think he/she is doing a good job for you. Good Luck.

Matt Puzz
Licensed Loan Originator
Amerifirst Financial, Inc.
1910 S. Stapley Drive #209
Mesa, AZ 85204
Direct: 602-410-9333
Office: 480-682-6617
Fax: 480-344-3687
NMLS# 213777 AZ LO-0915068
Apply Online: http://www.mattpuzz.com
Web Reference: http://www.mattpuzz.com
0 votes Thank Flag Link Fri Apr 8, 2011
Regardless of where you end up getting your mortgage you should understand that you can increase or decrease your rate which will decrease or increase your fees, including the loan origination points. This might seem a bit confusing at first, but can be clarified very eaily in a 10 minute conversation. Every client's situation is very different, so it's hard to tell what would be best for you without knowing all the details. To directly answer your question, I would say a 5% rate with two origination points seems to be on the high side based on the information you have given, but it's not terrible.

Feel free to call (425-241-1922) or email (bill@billprovost.com) for more info.
Web Reference: http://www.billprovost.com
0 votes Thank Flag Link Fri Apr 8, 2011
I would ask a few lenders. Seems really high to me, but it is a small loan too. Here are 3 really good ones:
Barberio, Karen
US Bank
Other karen.barberio@usbank.com
Mobile +1 (760) 212-1416
Work +1 (760) 720-2449
Work Fax +1 (760) 720-2679
Bateman, Rusty
Bank of America
Other rusty.bateman@bankofamerica.com
Mobile +1 (760) 712-7076
Work +1 (760) 231-8857
Bush, Kenneth
kenneth.e.bush@hsl-ca.com
Mobile 619-337-3241
0 votes Thank Flag Link Fri Apr 8, 2011
We do a $1500 flat fee if you're interested. Your rate will probably be a lot better as well!
Call me to get started.
858-848-LOAN
0 votes Thank Flag Link Fri Apr 8, 2011
Jim,

As an active Broker in the business for some time we have developed relationships with several banks over the years, and they take great care of our clients.

I'm sure there are great mortgage brokers out there, but in my experience their fees are routinely higher and we have had more problems with them not being able to deliver on loan programs promised to clients than when dealing direct with lenders.

I would ask your agent/broker for lender referrals as 2% also sounds high to me.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Fri Apr 8, 2011
You can always "shop" other lenders to see if any other lenders in your area don't charge points & yet quote the same 30 year fixed rate or better. You can do this over the phone without giving out your info, other than buying a condo.
0 votes Thank Flag Link Fri Apr 8, 2011
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