Posted on: 21st Apr, 2009 05:51 pm
I'm a first time home buyer, dealing with this mortgage process for the first time (quite daunting), and I wanted to get some opinions as far as the GFE I've gotten from both a bank and a broker, who happens to be a friend of a friend (and I'm learning this actually is a BAD idea maybe!)
So, my situation: Credit score is 810, but I don't have a load of cash for a downpayment. I could swing 7% or so, but 10% would leave me with no reserves. So, on the advice of BOTH lenders, I went looking for FHA loans.
Since the broker is a friend of a friend, I decided to do most of the process with him.. It turns out his closing costs are about $500 higher than the bank, however I feel like I prefer dealing with him because the bank reps seem relatively reluctant to answer the questions I have and I have MANY - while the broker has helped me along so far.
The only problem I have is I'm not sure I'm getting the best deal from him. Here's what he's charging me:
45 Day rate lock at 5.00%
800 lines:
Appraisal: $350
Credit Report: $18
Processing Fee: $495
Administration Fee: $650
Flood Cert Fee: $13
"Closing Doc": $100
1100 Lines:
Settlement or Closing Fee: $1500
Document Preparation Fee: $115
1300 Lines:
Survey: $350
Yield Spread Premium: "Up to 4.5%".
So, to ME, and comparing to the bank's GFE from a month ago (and it's hard to go apples to apples, as they call these fees different things) - it looks like the primary difference is A) he's charging a $495 processing fee that the bank is not, and B) the talk about the "yield spread premium".
I understand the YSP is part of the difference between the lowest rate he can get and what he's charging me, at 5.00%. Now I also understand that FHA rates are a bit higher than conventional, and with conventional rates at 4.9, I can't imagine he's making that much on the yield spread. Not sure why it says "up to 4.5%" though, that's what scares me. 4.5% seems to be a lot to be pocketing on my loan.
That, and I really can't help but feel the "Processing Fee" and "Administration Fee" and then the "Closing Doc" should really all be covered by one fee.
I guess I could tell him thanks but no thanks and go off to the bank, who may end up then giving me a rate of 5.1% - thereby making the whole thing moot. (Unless I'm wrong, and FHA loans are in the high 4's now, too).
One lesson learned though -- better to do this with an arms-length relationship to the person you're dealing with. Makes negotiation a LOT earlier. If anything, that's a $600 lesson for me, I guess.
So, my situation: Credit score is 810, but I don't have a load of cash for a downpayment. I could swing 7% or so, but 10% would leave me with no reserves. So, on the advice of BOTH lenders, I went looking for FHA loans.
Since the broker is a friend of a friend, I decided to do most of the process with him.. It turns out his closing costs are about $500 higher than the bank, however I feel like I prefer dealing with him because the bank reps seem relatively reluctant to answer the questions I have and I have MANY - while the broker has helped me along so far.
The only problem I have is I'm not sure I'm getting the best deal from him. Here's what he's charging me:
45 Day rate lock at 5.00%
800 lines:
Appraisal: $350
Credit Report: $18
Processing Fee: $495
Administration Fee: $650
Flood Cert Fee: $13
"Closing Doc": $100
1100 Lines:
Settlement or Closing Fee: $1500
Document Preparation Fee: $115
1300 Lines:
Survey: $350
Yield Spread Premium: "Up to 4.5%".
So, to ME, and comparing to the bank's GFE from a month ago (and it's hard to go apples to apples, as they call these fees different things) - it looks like the primary difference is A) he's charging a $495 processing fee that the bank is not, and B) the talk about the "yield spread premium".
I understand the YSP is part of the difference between the lowest rate he can get and what he's charging me, at 5.00%. Now I also understand that FHA rates are a bit higher than conventional, and with conventional rates at 4.9, I can't imagine he's making that much on the yield spread. Not sure why it says "up to 4.5%" though, that's what scares me. 4.5% seems to be a lot to be pocketing on my loan.
That, and I really can't help but feel the "Processing Fee" and "Administration Fee" and then the "Closing Doc" should really all be covered by one fee.
I guess I could tell him thanks but no thanks and go off to the bank, who may end up then giving me a rate of 5.1% - thereby making the whole thing moot. (Unless I'm wrong, and FHA loans are in the high 4's now, too).
One lesson learned though -- better to do this with an arms-length relationship to the person you're dealing with. Makes negotiation a LOT earlier. If anything, that's a $600 lesson for me, I guess.
Hi
If you think the mortgage broker is charging too much, you should contact other some other brokers and find out how much they are charging. This is why it is always good to shop around and get various offers and estimations from different lenders and brokers, so you can choose among them the one that suits you the best.
If you think the mortgage broker is charging too much, you should contact other some other brokers and find out how much they are charging. This is why it is always good to shop around and get various offers and estimations from different lenders and brokers, so you can choose among them the one that suits you the best.
You have an 810 score and your friend is offering a rate of 10.0?. A more reasonable rate would be 5-5.5%. No way!!! Fees are going to vary. If you are going with the broker you have broker fees and lender fees. Dealing with the bank you will have or should have just bank fees.
donna, i don't know where you got your 10% number, unless you're adding the ysp to the rate. that's not correct; but i agree with the above comments that 4.5% is way too high for the yield spread.
fees do vary, indeed, as donna said. i don't think the broker's "junk" fees are outrageous, yet the overall scheme looks way too expensive. drop the broker - your assessment is correct, if i read you right. it seems to me you are leaning toward the bank anyway. go for it.
fees do vary, indeed, as donna said. i don't think the broker's "junk" fees are outrageous, yet the overall scheme looks way too expensive. drop the broker - your assessment is correct, if i read you right. it seems to me you are leaning toward the bank anyway. go for it.
I apologize I was tired and misread the part about the 10% I read 10% down and said rate..sorry for the confusion. I will state that the ysp of 0-4.5% is merely a figure. Brokers are required to put that on the gfe to notify the borrower what the broker could be paid. It is just a range. However, with rates and pricing these days I have not seen many if any 4.5% ysps.
oops...well that happens, donna...we're all human, after all.
i think the broker in this case has to be more precise. obviously, 4.5 ought to scare anyone away. if it's 2, that is still probably more than necessary. anything more than 2 and it's pocket lining.
i think the broker in this case has to be more precise. obviously, 4.5 ought to scare anyone away. if it's 2, that is still probably more than necessary. anything more than 2 and it's pocket lining.
I'm currently in almost the exact same situation a tcp100, except my credit score isn't 810...that's pretty amazing. Mine is a good 760 though so my rates still should be good. What is really getting to me though is all the fee associated with my GFE. It seems like there are several fees that mean the same thing but have another name, it's almost as if i'm getting charged 2 or 3 tiems for the same items. Here's the break down, is this normal!!?? What on here should I consider "junk"? By the way this house is in Austin, TX if that helps.
800 Lines:
Loan Originating Fee: 1%
Loan Discount: 251.01
Appraisal Fee: 400.00
Credit Report: 11.10
Lenders Inspection Fee: 0
Mortgage Broker Fee: 0
Tax Related Service Fee: 65
Processing Fee: 450
Underwriting Fee: 665
Wire Transfer Fee: 0
Lender Administration: 400
Brokered Loan Fee: 400
Flood Cert: 19
1100 Lines
Closing/Escrow Fee: 250
Document Preperation Fee: 150
Notary Fees: 0
Attorney Fee: 100
Title Insurance: 175
Title Endorsement Fees: 250
Does all this seem right to you?
Any help would be greatly appreciated!
-BigBueller
800 Lines:
Loan Originating Fee: 1%
Loan Discount: 251.01
Appraisal Fee: 400.00
Credit Report: 11.10
Lenders Inspection Fee: 0
Mortgage Broker Fee: 0
Tax Related Service Fee: 65
Processing Fee: 450
Underwriting Fee: 665
Wire Transfer Fee: 0
Lender Administration: 400
Brokered Loan Fee: 400
Flood Cert: 19
1100 Lines
Closing/Escrow Fee: 250
Document Preperation Fee: 150
Notary Fees: 0
Attorney Fee: 100
Title Insurance: 175
Title Endorsement Fees: 250
Does all this seem right to you?
Any help would be greatly appreciated!
-BigBueller
Hey BigBueller, Actually being in Texas as well the fees may be a little low with respect to title fees.