Origination Fee and Discount Fee (loan officer, income tax, premium, credit)

[gc333]

On my good faith estimate I received the following on a loan of $124,358.
Orgination Points 1%, $1220
Discount Points -0.875%, -$1088

Does the negative in the discount point mean I would be paying .125% of a point in total? Is it like me getting $1088 credit to be subtracted from the $1220 from the origination point? Thanks for all the advice guys, you guys are really helpful.

[VictorBurek]

That is how it looks to me, but my question would be why show a point origination and then discount to subtract when they could have just shown you .125 origination and that is it. I have never seen this done before and i would caution you in moving forward with this lender.

I would suggest that you either find a different lender or get clarification from this lender why they are showing it that way. Please post back what they say. I am thinking that they made a mistake and they are going to charge you 1 point origination and .875 discount. Just my opinion, but this looks very suspecious.

[ShanetheMortgageMan]

I wonder how this would be viewed for income tax purposes - you normally can write off origination fees on a purchase, but would the fact that also getting a .875% credit only create a .125% origination fee write off, or would the OP get a full 1% origination fee write off?

[gc333]

This is from Bank of America by the way, the loan officer told me I would be paying .125 of a point. In the GFE under HUD code 205 there is an item labeled, Lender Premium Pricing Credit $1,088. So is that a credit subtracted from the origination fee?

[theo54s]

what is origination fee

[theo54s]

can a discount fee be considered a "point"

[VickiMBA]

Originally Posted by ShanetheMortgageMan

I wonder how this would be viewed for income tax purposes - you normally can write off origination fees on a purchase, but would the fact that also getting a .875% credit only create a .125% origination fee write off, or would the OP get a full 1% origination fee write off?

Hmm...interesting point...

You can typically write off all "points" (origination as well as discount points) used to obtain a loan and/or pay upfront interest so long as you meet other IRS requirements.

Since you can deduct both (meaning 1% origination and 1% discount = 2% can be deducted), in this case must you total both, or can you actually just deduct the 1% origination and "forget" about the negative discount point?

This is something I'd like see a tax professional chime in on...

[VickiMBA]

Originally Posted by theo54s

can a discount fee be considered a "point"

Yes, a discount fee is considered a "point".