Is loan origination fees on mortgages always required?

Question

I am refinancing my 540K mortgage and the loan origination fee is 1% is there any way to avoid this? or is this common. total closing costs including prepaids is $11,700. Help!!

Answer 1

Everything is negotiable on a loan. Everything. Get quotes from multiple agencies (careful that you don't overdo it since most have to run a hard check against your credit which dings you a couple of points each time), and then bounce one off the other until you get the best deal possible. Don't forget about online businesses!

Answer 2

Roberta,

Loan originations fees are always optional, the mortgage company always makes money some way or another. If you don't want to pay the origination fee usually you will pay a higher rate to compensate for the origination fee. I am an owner of a mortgage company in Southern California and I would gladly work with you and let you know if you are being ripped off. Your credit score, loan to value, debt ratio, and type of loan are all taken into consideration, also if you are setting up an impound account for your taxes and insurace to be paid monthly in your payment you closing costs will be higher as well, if your loan funds in October you will be making you first payment in December and have to impound 4 months of property taxes and 2 months of your insurance, you will also have to pay prepaid interest charges from the day your loan funds til the last day of the month, this way you will not have a partial payment due in November and your first payment will be made on December 1st. I hope I am not confusing you more. If you have any questions feel free to email me through my yahoo answers

Answer 3

Look at your Good Faith Estimate:
The orgination of 1 percent can be lowered or taken off - ok! The other fees associated with your mortgage are the following:

Title Charges:
Title Insurance/Settlement/Wire Fee/Courier Fee and Recording fee. Title Insurance on a 540K is high, but not too much you can do about that - you can call the title company and see if they will lower it.

You will have interest from the day of funding (it is 3 business days from the closing, in case you want to have a right to resend, cancel the deal). Say you close on Octover 2, funds on Ocotber 6th, than you will have interest of 25 days (hope I counted right in my head). 25 days of interest on this loan size is high - If you close on the 20th, funds on the 25th (do not count weekends) than your interest will be for 6 days....

Interest per day is charged on your money, so you will not have a house mayment for 1 to 2 months....That is a way for the Bank/Lender to make money on the money earned (no way of getting around that, unless you close later in the month, toward the end of the month.

Other charges:

Processing fee, Tax service fee, appraisal (if not already paid for), Flood Cert, Lender underwriting fee.

As I mentioned, look at the GFE, talk with the broker / lender - let them know you are willing to go elsewhere and see if they will lower your fee's.....There are other brokers who would gladly have you as a client...

Just try not to have your credit re-pulled by all, ok - Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.

Answer 4

NO actually you do not need to pay that, if you tell your broker that you think it's too high and that you don't want to be charged an origination fee or you'll go with another broker to get the job done. He'll take it off. The broker already makes money on the back end from the lender getting a rebate so don't let them charge you this much. My Fiancee is a great Loan Officer and if you need any help i can help you. we're both honest people and we do business the honest way and to try to help borrowers not make max amount of money and have them pay way more than they should.

Answer 5

. I recall watching some ads that waived the origination fees. Check around for some other Lenders.Another option you can have is paying a point to reduce you interest rate...hopefully by a point....over time you will end up saving money.....example...instead of 6.5%...you can buy a point and bring your interest down to 5.5% interest. If you are paying PMI (private mortgage insurance)....that happens when you don't have 20% equity in the house, you can get a 80/20 loan. Two separate loan...one for 80% of the house and 20% of the house...this will avoid paying PMI..however,the interest might be different on each loan....good luck!!

Answer 6

I could do a no cost loan for you... I don't care what your credit is. I own a mortgage company, we make money selling your loan in the secondary market. Most likely I'd be able to match the interest rate you are looking at with the offer you currently have. Rates have dropped a bit in the last couple days too.

Email me if you'd like, there's no upfront commitment. I will even use the appraisal you've already paid for.

Answer 7

The Fee IS NOT REQUIRED. If you are getting a prime loan and you have excellent credit, try and negotiate it or consider going to another lender who advertises low fees.

Origination fees, underwriting fees, etc, are considered "junk fees' and are a way for the bank to get more money and pay their bankers-- but the bank makes enough off of interest, so this is just another income.

Answer 8

The origination fee is not required, but you will probably get a higher interest rate if there isn't an origination fee. It all depends on what is most important to you. Lower interest rate or lower closing costs?

Answer 9

legally they can charge you up to 5% of the loan amount, but they also have disclose to you how they get paid for your loan.
if they give you really good rate and they don't get paid from the lender it's OK, but if you thing they charge you too much- try to negotiate the fee with them or look somewhere else.
take your Good Faith Estimate to another broker and ask them if they can bit this one and see what happen. Wish you good luck.

Answer 10

You absolutely don't have to pay origination fees.
Theres so many lenders competing that you should definitely shop around to get the best terms.

Like here: http://loans.savingslife.com
get a bunch of free quotes from competing local lenders.