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I'm a mortgage broker and here are how my fees are calculated and what they go for.
Origination Fee - Usually 1% This is the amount that is shared by myself and the owners of the company. I get a % of it. I can raise it or lower it based on the situation.
Yield Spread - Anywhere from 0% to 1%. This is an amount that the lender pays me to sell you a higher interest rate. If you are only keeping your loan for a short time it might make sense to have a higher interest rate and lower fees. If you will be in your home over 5 years then it makes sense to have higher fees and maybe even buy the rate down with points.
Processing Fee - $445 - This amount goes to my processor so that she gets paid. She's the one who deals with the lender, Title company, employer, landlord.....
Appraisal Fee - $400-$550 This goes to a 3rd party who does the appraisal.
Credit Fee - $17 - $25. In Oregon, it can no longer include any junk fees.
If you believe that your broker is doing a good job, and just want his fees adjusted, ask him. It can never hurt.
There's a YSP to the broker as well but I don't know what is exactly as a $ figure... just working of the GFE now. It can be between .125 and 3.5 according to the line item.
I have FICOS of +800 BTW. Feedback?
Edited to add
In AZ. Rate quoted is 6.00 APR with 5% down on a VA loan. I didn't put this in the original question because rates have been at 5.5 to 6.x in the last 2 weeks... I had a GFE with same #'s but a 5.5 30 year fixed when that was the prevailing rate in Feb...
I'm confused why everyone is focused on how much fees are added to the loan. Shouldn't it all comes down to the true APR you get? A broker with fee might quote you a lower rate than the one who doesn't. At least that's what I got from 3 lenders. when you convert your rate into APR with closing cost considered, it all come very close to each other. Assuming that I'm putting down the same amount of cash for closing, whether for points or broker fees, the 3 GFEs I got almost have the same rate.
It's simply a decision on whether you want to spend more cash upfront to lower your interest loss or you want to keep the cash for other purposes.
BUT, please correct me if I'm wrong since this is my just first mortgage shopping.
There's a YSP to the broker as well but I don't know what is exactly as a $ figure... just working of the GFE now. It can be between .125 and 3.5 according to the line item.
some lenders calculate APR differently. this is why you may have the same rate/same fees, but a different APR. I know the government has a standard for APR, but there are some lenders that dont follow it to the 't'.
This is why you must compare by the fees, and note rate.
800 lines will show all the lender fees.
What if Lender A's good faith estimate reads like this. 5.5%
300 appraisal
500 origination fee.
2000 attorney fee
1000 title insurance fee
total 3800
Lender B 5.5%
2000 origination fee
300 appraisal fee
500 attorney fee
1000 title insurance
total 3800
You would think that Lender A is the best....but in reality they may not be.
A lot of lenders use to do this, and some still do.
You would pick Lender A then at closing you will see the sheet as....
2000 origination fee
300 appraisal fee
500 attorney
1000 title ins
You're still paying 3800....but the fees were in the wrong place.
Another thing......rate is 5.5% and the paying is 500 per month.
You go to closing....and see that your rate is 5.75%, and you ask your lender about it. They say that they 'misquoted' the rate...but the payment is still the same at 500 per month.
Yes there are bad ppl!
This is why I tell my borrowers to CALL the attorney/title company DIRECTLY, and to ask them their fees. Once the borrower has the fees....then I tell the borrower to tell every lender to put those same exact fees.
Now all the borrower needs to focus on is the note rate...and the lender fees. (I would still check the attorney fees)
Quote:
Originally Posted by ageha
I'm confused why everyone is focused on how much fees are added to the loan. Shouldn't it all comes down to the true APR you get? A broker with fee might quote you a lower rate than the one who doesn't. At least that's what I got from 3 lenders. when you convert your rate into APR with closing cost considered, it all come very close to each other. Assuming that I'm putting down the same amount of cash for closing, whether for points or broker fees, the 3 GFEs I got almost have the same rate.
It's simply a decision on whether you want to spend more cash upfront to lower your interest loss or you want to keep the cash for other purposes.
BUT, please correct me if I'm wrong since this is my just first mortgage shopping.
renriq02- funny, I try to tell my clients the same things. I have seen GFE that have outrageously misquoted attorney, insurance or other 3rd party fees to make the bottom line look better. In the end, the lender has 0 control of what a buyer will have to pay for insurance, taxes or other 3rd party fees.
Same game is played with fees vs rate. A 1% origination fee on a loan where the lender is giving you a great interest rate (par or low YSP) may not be as bad as a 0% origination fee with a much higher rate (3-4% commission paid).
It depends on the sum of all the factors and a particular clients needs. Credit, assets and income will determine rate and terms. But so are the financial goals and intentions of a buyer. The longer someone wants to be in a home the better it is to pay costs and get a lower rate and vice versa.
Its very upsetting to see Realtors and other professionals call the fees "excessive" without knowing all the factors. Please check your facts... I know many Realtors that charge 3% to list a home and I consider it "excessive" because all they do is list it on MLS and sit back. Then there are others that work hard for their clients and are worth 2-3x what they make in the value they provide.
If the 350.00 is for the appraisal and the credit check the lender is not getting those fees so they would be called third party fees. So really the lender is only making 1% origination and $550.00 commitment fee and this fee is usually $300.00. You need to look at the good faith estimate and see what the yield spread is if it is not on the Good Faith call and ask. Sometimes instead of a higher rate the lender will go with a lower rate and be a little higher on the closing cost. And if you are using a real estate agent remember they get 6% of what you purchased the house for.
Yield Spread Premium is only shown by brokers. Banks are not required to show this so you won't be able to find out through them.
I would never assume it's 6% on realtor's commission, and would advise to always ask the realtor.
Quote:
Originally Posted by PAMELA2448
If the 350.00 is for the appraisal and the credit check the lender is not getting those fees so they would be called third party fees. So really the lender is only making 1% origination and $550.00 commitment fee and this fee is usually $300.00. You need to look at the good faith estimate and see what the yield spread is if it is not on the Good Faith call and ask. Sometimes instead of a higher rate the lender will go with a lower rate and be a little higher on the closing cost. And if you are using a real estate agent remember they get 6% of what you purchased the house for.
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