Please forgive this slightly off topic post, but since all of you are
homeowners, maybe you have some thoughts on this. I am going to
refinance in the near future, and I have a GFE with an origination fee
of 1%. Can anyone tell me just what an origination fee really is? Is
it like going to a car dealership and seeing "extra dealer markup" on
the sticker? Is the origination fee generally non-negotiable? Thanks
for your thoughts on this.
The lender will tell you it is non negotiable. This is a charge for
preparing paperwork. As far as I know every charge like this one is
negotiable. Many lenders do not have such a charge. Search around for
I got my last mortgage through the internet and saved a good deal of
money on charges like this one. Times are a little different now because
of the economic downturn. YMMV.
EJ in NJ
AE Todd wrote:
Exactly, except that _everything_ on a mortgage is negotiable, especially these
days. At least assuming your credit is sterling. Your broker/bank/mortgage
company/whatever can play with the rate to make the fees go away, or conversely,
you can buy down the rate by paying points.
Assuming the only reason you need to refi is to take advantage of lower rates,
you are in the driver's seat. You need to get two or three quotes and compare...
The "origination fee" has nothing to do with your interest payment. Lets
say you borrow $100,000 for thirty years. The 1% origination fee is
$1000. The interest charges for the thirty year term will be something
in the order of $75,000 to $90,000.
You will also be amazed at the number of bloodsuckers that show up as
"closing costs" on your new refinance.
EJ in NJ
AE Todd wrote:
Find out how they classify the origination fee - it's probably a broker's
bonus, but if it's really a discount point, it might be tax deductable -
find out where they put it on the HUD Settlement Statement.
I'd also request a HUD Settlement Statement from them when ya start talking
about their loan. There are some line items that they won't be able to fill
in until closing (prepaids, escrow, etc.) but they should be able to show
you most of the Settlement Statement line items that go into the type of
loan you're considering.
It can eliminate surprises at closing . . .
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