100% financing no down payment rate at 7% loan origination fee at 3%of 125,000 total closing is about 8,300?

Question

my question is . on my good faith estimate after the loan originator's fee. ther is a brief statement, that the lender will compensate the broker with 3% of the loan amount this is an a paper loan ( freddie mac) no discount points are there. shuold i be worried. first time home buyer. middle score is 648

Answer 1

Without knowing where you are located, how much your property taxes and homeowners insurance are and what else you may have had to pay at closing it is very hard to say if you paid too much. In most states and locations, even if you escrowed your taxes and insurance, 8,300 seems too high on a 125k loan. Many Realtors charge anywhere from 5-7% so overall your closing costs are not terrible but do seem a little high for a mortgage. Some of these closing costs may be tax deductible so ask your CPA about that. Now if your broker is charging you a flat 3% origination fee and is also receiving a 3% YSP (Yield spread Premium) from the lender as well, then this broker is definitely making a lot of money on your loan and you most definitely can find a better deal by shopping around a bit more.

Answer 2

Before labeling these guys as complete crooks, did your bottom line figure say you owe $8,300? Keep in mind that the 3% compensation doesn't come out of your pocket. Closing costs shouldn't be much more over $3000 on a loan like this and if you are being charged points, you should surely be getting better than a 7%. There may be room for negotiation with these guys to try to help you get a better deal or you may need to find a new lender all together... However,
I would be happy to look at your figures if you would like me to, and not to try to obtain your business, especially because it is unlikely you are in the same state in which I am licensed, but just to help you out. Thinking back to my first home before I was in the business, I think I got royally screwed and wish I had someone to help.
Feel free to email me directly [e-mail] if you have any questions...
Good Luck

Answer 3

Two words: RIP OFF

3% origination? For a 648 credit score? AND he is getting money on the back?

Go to another lender...IMMEDIATELY, with your credit score, that is highway robbery. Are you using a broker? Go to Countrywide, First Horizon, Wells Fargo...anyone...pick any of them...but DO NOT close on that loan.

For a broker to make $7K (like the other poster said...and that sounds right) on a $125k loan is INSANE.

I don't even have to see your paperwork to know that just about anyone breathing can get you a better deal than that.

PS: I would bet dollars to doughnuts he sent your loan to a SUBPRIME lender instead of an A-paper lender that you most likely qualify for....they make big money off those loans.

Let me give you an idea of comparison: The last house I sold was in Charlotte, NC (high taxes) for $175K and the lady had a lower score than you, no money down, and paid HALF the closing costs you were quoted....and that INCLUDED setting up her escrow account.

Answer 4

The fee's on this loan seem a little on the high end. At www.restructureyourmortgage.com the standard fee for closing a loan in 7 days is 1.75 origination points. Feel free to browse our website for any information that might be useful to you. Best of luck.

Answer 5

This is because your dealing with a broker who brokering to the lender or bank. They not only get the 3% orig fee and they will get whats called "par plus pricing". The higher the rate they sell you the more money they make. Right now from what you have said he is making over 7,000 off this transaction not counting any other junk fees like underwriting or doc prep.

Answer 6

You went through a mortage broker, not the lending company. The lending company pays the broker for finding and processing the loan, in this case 3%.
I can't say if the 7% or the $8300 is good or not, not without seeing the GFE, but paying a broker is standard.pp