Posted on: 10th Mar, 2010 10:48 pm
I just went through a refi on my home and something interesting happened. I use a mortgage broker and he told me at the beginning that he made one point on loans. Fine.
On the refi, the loan amount was $400,000. At the very end when I signed the docs, I saw that the broker made over $5000 (about 1.25 points). Is that normal? I would have thought that the broker's fee was fixed and if there was an extra $1000 to be distributed, it would have come to me (the borrower).
Now, I am doing a purchase loan on a foreclosure (a very cheap home -- I am borrowing $70,000). Now, his fee is 1.5 points. Is it normal to see a bump like that? I assume he wants to charge more money because making one point on a 70k loan ($700) isn't amazing. But I thought it was strange to see him say that he typically makes 1 point on loans and this smaller one is now 1.5. Not sure if he just wants a higher percentage because the loan is so small, or if it is tied to the foreclosure, or what.
Help! Thanks.
On the refi, the loan amount was $400,000. At the very end when I signed the docs, I saw that the broker made over $5000 (about 1.25 points). Is that normal? I would have thought that the broker's fee was fixed and if there was an extra $1000 to be distributed, it would have come to me (the borrower).
Now, I am doing a purchase loan on a foreclosure (a very cheap home -- I am borrowing $70,000). Now, his fee is 1.5 points. Is it normal to see a bump like that? I assume he wants to charge more money because making one point on a 70k loan ($700) isn't amazing. But I thought it was strange to see him say that he typically makes 1 point on loans and this smaller one is now 1.5. Not sure if he just wants a higher percentage because the loan is so small, or if it is tied to the foreclosure, or what.
Help! Thanks.
Hi chazzmani,
As far as I know, the fees you pay to the mortgage broker are negotiable. The brokers are entitled to get a yield spread premium, which they sometimes do not disclose till you close on the loan. However, whatever amount of fee you pay them for finding you a good rate of interest, it is always negotiable. So, if you think your mortgage broker is charging you higher fees, you can negotiate with him.
As far as I know, the fees you pay to the mortgage broker are negotiable. The brokers are entitled to get a yield spread premium, which they sometimes do not disclose till you close on the loan. However, whatever amount of fee you pay them for finding you a good rate of interest, it is always negotiable. So, if you think your mortgage broker is charging you higher fees, you can negotiate with him.
and to add to your post jenkin7, the fees charged can and will vary from loan to loan. points paid are also reflective of the interest rate charged. in the first case above, it doesn't seem out of order for the broker to have made 1.5% instead of the 1% originally noted. as for the larger amount for the smaller loan, that not only makes sense, it's essential for one's pocketbook.
