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I am doing a cash out refinance of my primary residence and these are the fees that my mortgage broker is charging. Do they seem higher than average?
80% LTV cash out of my paid off primary residence
Conventional, 30 year fixed
I have excellent credit-A
Date-04/2011
loan amount- 190K
Interest rate is 5.125%
Loan origination fee- $1900
Underwriting fee-$1315
loan discount fee-$1900
lenders title insurance- 1100
...or if I don't want to pay the discount fee, my rate would be 5.375%
If I don't want to pay both the discount and origination fee, my rate would be 6.625%
The mortgage broker said that the underwriting fee combined all of the fees. I thought that the rate seemed a little high since I have great credit. Is he making extra money off the higher rate?
Yes, my credit score is above 799 but my husbands is around 705. Also, I live in AZ and the these fees do NOT include any third party fees (appraisal,title, credit report, etc).
Thanks!
The reason for the extra fees is because of your husbands lower FICO score. Conventional loans are very sensitive to credit score, lower credit score the more expensive the loan is compared to someone with ideal credit scores. It didn't always used to be like that, but several years ago they changed to that sort of risk-based-pricing.
Compared to if you both had 740+ scores, with a 705 mid score, cash out to 80% loan-to-value has a 1 point (1%) cost. That'd explain the loan discount fee.
Is he needed to be on the loan in order to qualify, or can you qualify on your own?
Without him you'd save $1,900 (the discount fee).
Overall though I feel that in your current situation, with both of you on the mortgage, for those same amount of fees, you should looking at about a 4.875% rate.
Cash out at 80% isn't cheap any more. I can't get to my rates, but some investors do charge more for the sand states, where foreclosures have been higher than average (CA, FL, AZ, NV), so anything I provide you wouldn't be comparable. Brokers and bankers both changed the way they can be compensated, and as a result, we are seeing some wild swings in rate/point quotes.
Tomorrow, after 11 AM, call another broker or mortgage company and a bank. Tell them, you need a rate quote that can be locked in today and the charges associated with that quote. Tell them to send you the information based on the scores you give then. Tell them it need not be on a GFE, but a worksheet that shows the charges for you to make an immediate decision. If you find a significant change in rate and fees, be prepared to provide the loan application by phone, fax or email to get your lock. The calls to the other broker and bank should be in the same day, in the same time of day. I think this is the only way you can figure out if you are getting a good deal or not from your current lender.
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