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Old 04-10-2009, 07:17 PM
 
Location: Seattle
1,814 posts, read 3,374,386 times
Reputation: 4209

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I’m looking into refinancing my condo due to the lower interest rates. I contacted two lending institutions to compare rates. Both came back with a fee that is titled “Discount/Commitment Fee” which was $1275.00. They both indicated it was a new mandatory fee specific to condos. This is a refinance of $170,000.

Has anyone heard of this new mandatory fee specific to condos?
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Old 04-10-2009, 08:41 PM
 
26,590 posts, read 56,853,900 times
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TOTAL BS. That is money that they are pocketing as profit. A discount fee "could" be points, but needs to be listed as such on the Hud 1 and reflected in the rate. Sometimes the commitment fee is applied towards closing costs (ie refundable when you close with that lender) but if not, it's a bogus junk fee.
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Old 04-11-2009, 11:04 AM
 
Location: San Jose (Willow Glen)
180 posts, read 650,896 times
Reputation: 96
Quote:
Originally Posted by annerk View Post
TOTAL BS. That is money that they are pocketing as profit. A discount fee "could" be points, but needs to be listed as such on the Hud 1 and reflected in the rate. Sometimes the commitment fee is applied towards closing costs (ie refundable when you close with that lender) but if not, it's a bogus junk fee.
You are actually way off base here.

What they are quoting is what's called a Fannie Mae Loan Level Price Adjustment (LLPA). They have these for certain credit scores, LTVs, property types, occupancy types, etc...

The fee for condo/townhomes is .75% for any loan to value over 75%. This is across the board for any lender that sells agency products (which are the only lenders with good rates right now).

Some lenders will be able to increase your rate to compensate for the adjustment, but its going to be there one way or another unless you get your loan to value under 75% (you can also avoid it if you do a 15 year mtg instead of a 30)


You can verify for yourself on page 3 of this document:

https://www.efanniemae.com/sf/refmat...llpamatrix.pdf
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Old 04-11-2009, 10:38 PM
 
26,590 posts, read 56,853,900 times
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Then they should be disclosing it as such on the HUD1, not calling it a "commitment fee."
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Old 04-12-2009, 12:49 AM
 
Location: Seattle
1,814 posts, read 3,374,386 times
Reputation: 4209
Quote:
Originally Posted by AndrewSoss View Post
What they are quoting is what's called a Fannie Mae Loan Level Price Adjustment (LLPA). They have these for certain credit scores, LTVs, property types, occupancy types, etc...
Perfect. Thank you. I will ask about the 75% as we should be able to cover that, particularly if it alleviates this fee. Our credit score was over 800 so I'm not sure how much effect that had.
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Old 05-04-2009, 02:14 PM
 
1 posts, read 4,844 times
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After looking at these documents, it seems that if you own a condominium, and refinance, you will be paying .75 points if you have a LTV of 75% or greater. Regardless of credit score. Is that correct?
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Old 05-05-2009, 01:35 AM
 
Location: San Jose (Willow Glen)
180 posts, read 650,896 times
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Quote:
Originally Posted by noahdarrow View Post
After looking at these documents, it seems that if you own a condominium, and refinance, you will be paying .75 points if you have a LTV of 75% or greater. Regardless of credit score. Is that correct?
that is correct. The only way to avoid the hit is to have 25% equity or a 15 year fixed.
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