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Old 02-16-2012, 11:08 AM
 
Location: Pixburgh
1,214 posts, read 1,450,641 times
Reputation: 1380

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im lookng at a GFE and trying to figure out if these charges are fair, and get a little confused by this.

Origination- 4,763
Your credit or charge(points)- You receive a credit of 4,108 for the interest rate of 3.75% - -4108.

total = $654


how exactly does that work? I am really not understanding it, it seems to me im taking a lower rate than i need to but at 3.75% i can't see how that would be the case (30 year fixed)
.the yield spread premium is 1.321%, and origination is 1.25% which from my limited knowledge seems ok?
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Old 02-16-2012, 11:41 AM
 
Location: DFW
12,229 posts, read 21,411,120 times
Reputation: 33266
They're paying most of your closing costs with a credit you have on your rate. You could get a lower rate by paying THEM to buy the rate down, but then you'd have additional moneys to bring to closing or to roll into your loan balance.
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Old 02-16-2012, 01:24 PM
 
Location: Wake Forest, NC
835 posts, read 3,970,472 times
Reputation: 650
Are you working with a broker or a lender?
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Old 02-16-2012, 01:56 PM
 
Location: Pixburgh
1,214 posts, read 1,450,641 times
Reputation: 1380
a broker
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Old 02-16-2012, 08:05 PM
 
Location: Pixburgh
1,214 posts, read 1,450,641 times
Reputation: 1380
OK. so I figured it out I think. Anyone who is not a broker, please let me know if this is accurate.



Its just a confusing way to NOT say "I'm charging you 4000 bucks to do your loan"

Origination fee arbitrarily inflated by the amount of the YSP. If you put it this way, its seems like they are cutting you a break, giving some money towards closing...But in reality, it is your money, and they are just taking as much as they legally can and giving you the leftovers.

They could very easily just compensate the YSP to the borrower and put their charge up top if I'm learning this form here correctly. Instead they do it this way, and say they are charging you nothing(ignoring the fact the YSP is actually your money per the spirit of RESPA).

Please correct me if I am wrong.
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Old 02-17-2012, 05:28 AM
 
Location: MID ATLANTIC
8,659 posts, read 22,820,703 times
Reputation: 10475
What you have there is courtesy of Dodd-Frank and some of the most confusing forms impletmented April 2010 by our government. Did you happen to notice the two (most important) items for any buyer are missing? Total payment and cash to close.

But to answer your question, yes, it sounds like you got it. I'm not sure I'd use the same language, but your comprehension is there. What's important is you are getting 3.75% for a fraction of a point. If that is a 30 year fixed, you're getting a great rate, especially after yesterday's bruising.
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Old 02-17-2012, 05:45 AM
 
Location: Wake Forest, NC
835 posts, read 3,970,472 times
Reputation: 650
Courtesy of Dodd-Frank the broker fee is locked in stone and non negotiable- must be identical % on every loan set quarterly. Only question is how you are going to pay it. Will it be with your funds for the lowest published rate or will it be by the lender for a slightly higher rate? You can bump it up again and use the additional lender credit to pay closing costs if you like. Your choice makes absolutely no difference to the broker because as I said their fee is set in stone.
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Old 02-17-2012, 11:42 AM
 
Location: Pixburgh
1,214 posts, read 1,450,641 times
Reputation: 1380
good to know. consider the cash out of pocket ends up like 70 bucks at closing i guess its a go then..thank you for helping put my mind at ease
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