Posted on: 07th Sep, 2008 01:06 pm
I would like to get opinions on the following GFE.
Purchase ~300,000
Midscore 620
Loan Amount is $296,000
Interest Rate 6.375
800's are:
804 = 14.00
805 = 0
808 = 2,960
809 = 70.00
810 = 590.00
811 = 600.00
812 = 35.00
Compensation to Broker from Lender
3.0% = 8,700
1100's are:
1101 = 295
1108 = 1579
1200's are:
1201 = 220
2102 = 1050
1203 = 600
1300's are:
1302 = 75
900's are:
901 = 15days @ $52/day = 780
902 = 5092
903 = 11mth @ 250/mth = 2750
1000's are:
1001 = 2mth @ 250/mth = 500
1004 = 2mth @ 275/mth = 550
I am trying to determine if this is a good deal or not. I am not sure about the "Compensation to Broker..." Should I continue to shop around?
Thanks in advance
Purchase ~300,000
Midscore 620
Loan Amount is $296,000
Interest Rate 6.375
800's are:
804 = 14.00
805 = 0
808 = 2,960
809 = 70.00
810 = 590.00
811 = 600.00
812 = 35.00
Compensation to Broker from Lender
3.0% = 8,700
1100's are:
1101 = 295
1108 = 1579
1200's are:
1201 = 220
2102 = 1050
1203 = 600
1300's are:
1302 = 75
900's are:
901 = 15days @ $52/day = 780
902 = 5092
903 = 11mth @ 250/mth = 2750
1000's are:
1001 = 2mth @ 250/mth = 500
1004 = 2mth @ 275/mth = 550
I am trying to determine if this is a good deal or not. I am not sure about the "Compensation to Broker..." Should I continue to shop around?
Thanks in advance
Welcome mycrew,
I'm sorry I can't say anything about the compensation to broker from lender. But I'd prefer to say something about lines 800 and above. For instance, line 804 represents the credit report fee which i think in your GFE is quite ok. There's no inspection fee required as is evident from line 805.
Line 808 represents the broker fees which is equal to 1-2% of your loan amount. In your case, it should be $3000-$6000. And you'll have to pay around 2,960. So, that's fair enough.
As far as lines 810 and 811 are concerned, I feel these are slightly higher fees but it varies from one lender to another.
I'm sorry I can't say anything about the compensation to broker from lender. But I'd prefer to say something about lines 800 and above. For instance, line 804 represents the credit report fee which i think in your GFE is quite ok. There's no inspection fee required as is evident from line 805.
Line 808 represents the broker fees which is equal to 1-2% of your loan amount. In your case, it should be $3000-$6000. And you'll have to pay around 2,960. So, that's fair enough.
As far as lines 810 and 811 are concerned, I feel these are slightly higher fees but it varies from one lender to another.
Most of the fees seem in line with standard practices. Most borrowers do not understand what the fees are for and why. A professional mortgage broker will explain these to their customers.
Click the link below for a free report that explains all those fees and what is acceptable and not.
Also, the compensation to broker is probabaly the yield spread or commission they are making from the lender. In CO we have to disclose this on all GFE's other states have different laws. Your rate directly effects the yield spread. Lower rate for you means less commission for lender.
Click the link below for a free report that explains all those fees and what is acceptable and not.
Also, the compensation to broker is probabaly the yield spread or commission they are making from the lender. In CO we have to disclose this on all GFE's other states have different laws. Your rate directly effects the yield spread. Lower rate for you means less commission for lender.
If you were to shop this around you would find cheaper. Just my two cents
agreed this is not that great of a deal better rate less fees available
Your broker is over charging you. 3%/$8700 on the backend to the broker from the lender is called the yield spread premium (YSP) and that's outragous unless he was doing a true no cost loan for you (not a no "upfront" cost).
If he had it at 1% Yield spread premium, that would still be a good profit when you include what he's charging you on the front of the loan. He could easily have given 5.875%-6.000% on this loan but is choosing to be greedy and take advantage of you, in my opinion.
If he tells you not to worry about the 3% or $8700 your not paying it the lender is don't believe it for a second YOU are paying that fee with a higher interest rate for the life of the loan.
If he had it at 1% Yield spread premium, that would still be a good profit when you include what he's charging you on the front of the loan. He could easily have given 5.875%-6.000% on this loan but is choosing to be greedy and take advantage of you, in my opinion.
If he tells you not to worry about the 3% or $8700 your not paying it the lender is don't believe it for a second YOU are paying that fee with a higher interest rate for the life of the loan.
I agree that you can find a lower rate even with your credit score. Should be closer to 6.00%. They are making a great profit by giving you a higher rate. So I say shop around!
You can find a better deal.
You should go through a lender directly, not a broker, then you can eliminate that yeild spread premium.
You should go through a lender directly, not a broker, then you can eliminate that yeild spread premium.
Going through a lender directly does not get rid of back end money it just doesnt have to be disclosed. Lenders make SRP and are not required to disclose that fact. Knowing it is a GFE the broker probably just put the max YSP as there is no way that rate is paying that much now. YSP is not a bad thing. If abused (rate too high) it can be
you said it right brian. lenders just don't have to disclose it. the fact is, a good mortgage broker can save someone money on their purchase or refinance because they have access to wholesale rates and multiple lenders so that they can shop around for the buyer to find the lowest rate.
I don't really think that brokers can nessecarily save you on a rate because they are required to disclose the yeild spread.
While most lenders have already promised a loan to a correspondant, it doesn't mean that it always goes with the batch, and some are required to be bought back. (especially in this market)
I think the difference is, you pay a higher ysp for a better rate, or you build it into the rate and pay less points at closing.
I have seen it go both ways where brokers charge ysp and the lender has charged points, a real disadvantage to a buyer. And I have seen lenders gouge as well.
The main thing a homebuyer needs to do is to utilize sites like these to gain the most accurate knowledge, use other sites, such as huds, fannies and freddies, and to do their research on the lender. Consumers these days are all about getting their 'reviews' out there. (Especially if they have had a bad experience).
The important thing is to read everything you sign, re-read it, and ask questions if you don't understand.
If your mortgage is going to adjust in the next year, it's a good thing that you are shopping around now.
I still feel that this person can do alot better on fees and rate than this specific broker is offering. But that is just my opinion.
While most lenders have already promised a loan to a correspondant, it doesn't mean that it always goes with the batch, and some are required to be bought back. (especially in this market)
I think the difference is, you pay a higher ysp for a better rate, or you build it into the rate and pay less points at closing.
I have seen it go both ways where brokers charge ysp and the lender has charged points, a real disadvantage to a buyer. And I have seen lenders gouge as well.
The main thing a homebuyer needs to do is to utilize sites like these to gain the most accurate knowledge, use other sites, such as huds, fannies and freddies, and to do their research on the lender. Consumers these days are all about getting their 'reviews' out there. (Especially if they have had a bad experience).
The important thing is to read everything you sign, re-read it, and ask questions if you don't understand.
If your mortgage is going to adjust in the next year, it's a good thing that you are shopping around now.
I still feel that this person can do alot better on fees and rate than this specific broker is offering. But that is just my opinion.