Can depend on a number of factors. Mortgage brokers typically earn their money from two areas of a loan transaction...loan origination fees and yield spread premiums. The loan origination fee can be almost any amount, but it in my state it is typically one percent of the loan amount. The yield spread premium is a "rebate" of sorts that the investor (actually lender) gives the mortgage broker for bringing the them the loan. The YSP will be based on the rate you're quoted. The lower the rate, the less the mortgage broker makes on the back side of the transaction. The can even quote it at "par" which means the mortgage broker makes nothing on the back side and only makes the loan origination fee. In this case, you get a good rate but would have to pay a higher loan origination fee so the mortgage broker can make at least 2% of the loan amount and can therefore stay in business.

VA loans also mandate the purchaser pay a Funding fee which increases each time the veteran uses a VA loan on a purchase. Make sure you're not confusing this fee with the L.O. fee.

Unless your broker is significantly buying down your interest rate with that fee, your cost seems to be quite excessive. Most lenders only charge around 1% in origination and receive some rebate from the lender for sending the loan through them.

If you'd like, send me your information and I will send you a counter-GFE for you to give to them to refute their fees and reduce your costs. If you have any questions, please let me know.

Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com

Apply Online: flagstarloans.com/lallison