Home Buying in Worcester>Question Details

Eth, Home Buyer in Shrewsbury, MA

My mortgage broker asks for 2% fee. On a loan of 200K, he gets $4000. Is that a fare price???

Asked by Eth, Shrewsbury, MA Mon Jul 28, 2008

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You are definately paying a fare price but I'm not sure whether it's a fair price or not.
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Funny!!! Of course it would have more impact, had you spelled "definitely" correctly. ;-)
2 votes Thank Flag Link Tue Jul 29, 2008
Alan May, Real Estate Pro in 60201
MVP'08
Contact
I talked with my mortgage associate at Drew Mortgage and there are two questions to be posed?
Is this an FHA loan?
Are they buying down the mortgage rate; 6.5% to 6% is two points (or 2%).
Call 1-800 - WHY - DREW for details.

First and foremost, do some comparison shopping and find a broker who is looking out for your interests.
Regards,
Rick Dickson
Broker-Owner
Powder House Realty Group
0 votes Thank Flag Link Tue Jul 29, 2008
You are definately paying a fare price but I'm not sure whether it's a fair price or not.
Web Reference: http://www.bowenboston.com
0 votes Thank Flag Link Mon Jul 28, 2008
The discount points that broker’s charge range from 3-6%. So it is not unusual to pay that. Often the local banks have better deals. Call around.
You can also ask for some discounts like recording fees (you could do it yourself), application fees could be reduced, you could find your own title company that will charge you less, ask for free credit report, close at the end of a month, etc.
0 votes Thank Flag Link Mon Jul 28, 2008
Simply put, no - it's not a fair price. However, if he is using part of that fee to help buy down your rate, not all of it would be going to him, in which case the fee would be okay.

I would take the GFE he gave you and use it to shop your loan, rate and terms. If you'd like, you can email me your credit score, loan parameters (purchase price, loan amount, loan type) and I will email you back another Godd Faith Estimate. I don't even need to see the one he gave you. I would prefer you use it to help get yourself a lower rate and/or fees. If your broker doesn't budge, then you know he's only concerned about profit and not getting you the best loan possible.
Feel free to contact me. I promise you I will not contact you further unless you request it.
Thanks
Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com
0 votes Thank Flag Link Mon Jul 28, 2008
The question is a little open ended. I guess the best way to answer the questions is the price fair for the hours of work, time and energy the broker has put into finding your loan. Has the broker been required to shop around to find a funding source? Has the loan had difficulty getting funding? How many hours has your Broker put into the transaction from start to finish? You maybe surprised that his or her hourly rate is not all that expensive. Remember some people pay the gas station mechanic $65.00 and hour to work on the car, plumber, carpenter, and electrician seventy five dollars an hour to do work around the house, so is the price your broker requiring to service the loan fair, only you can decide.
0 votes Thank Flag Link Mon Jul 28, 2008
2 points seems like a lot to be paying right now. Guess it depends on the rate you are getting as well. Shop around. Most of my clients are paying no points (aka: fee) these days. Any mortgage brokers want to chime in? Aren't mortgage brokers compensated on yield spreads as well?

In the interest of full disclosure I am not a mortgage broker, nor do I play one on TV, but that fee seems high to me.
0 votes Thank Flag Link Mon Jul 28, 2008
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