The Secret Behind Points And Closing Costs: Welcome To Part 4
Welcome back to the series. In the previous edition we have covered different secrets behind points and closing costs. Some of things you may have known, some you may not have known, and then some you have heard but did not understand.
If you have not read part 3, I recommend clicking here, The Secret Behind Points And Closing Costs, because the secrets will build upon each other.
With that out of the way, let us continue with the series and uncover more secrets.
For origination and points, you can calculate it yourself. The origination will be 1% of the loan balance. If you have a first and second mortgage, it will be 1% of the combined mortgages.
If you’ve decided to buy the rate down with extra points, just add an additional 1% for each point you’ve decided to buy.
If you’ve got two loans, the points probably only apply to the first mortgage.
You could buy the rate down on the second mortgage as well but it’s less common.
The Secret Behind Points And Closing Costs: Lender Fees
The second category is lenders fees. These fees vary widely. Some lenders have underwriting fees as low as $350. Others are as high as $1300 or even higher.
Also, if you have a second mortgage, there may be a second underwriting fee and I’ve seen those as high as $600. Another fee you’ll see is processing. That’s another lender fee and I’ve seen those range from about $250 to $1000.
The Secret Behind Points And Closing Costs: My Opinion
Here’s my opinion on lender fees. If they’re charging a lot for underwriting, they’re probably using that revenue to help subsidize competitive rates. It’s just a different strategy. It’s not like some lenders are making huge profits while others are making nothing.
The lending community has become extremely competitive and individual companies will try to get their revenue from different places. At the end of the day, these fees will be fully disclosed through the APR and that’s always the best way to determine the competitiveness of your quote.
As for processing, anything over $500 is a rip-off. All Loan Officers have processors. They’re real people who process real loans and chase all the conditions required by the Lender.
It’s a tedious job and these people have to get paid somehow. I’ve got no problem with a processing fee as high as $500. Personally, I know people who charge $395 and less for processing.
But a processing fee of $1000 is a complete rip-off and I would push back hard on anyone trying to charge me that much.
Third party fees are next. In California, you can expect to pay from $350 to $500 for your appraisal depending on what format the lender requires. You can expect $15 or $25 for your credit report, $25 to $75 for tax service, $10 to $20 for your flood certification and $60 to $200 for your notary.
Why such a big variance for notary? Because you can have a mobile notary come to your home for the signing. That’s a lot more convenient but it’ll cost you, usually $150 for a single mortgage and $200 for a first and second combo. If you sign at the Title Company, the notary fee is usually $60.
The Secret Behind Points And Closing Costs: Stay Tuned For Part 5
We have covered a good amount of information in this article. However there are more secrets to be unleashed as we progress along in the series, “The Secret Behind Points And Closing Costs“. So be sure to look out for part 5 of this series. Till then Take care and have a great day.
Take Care And Have A Great Day
Dr. Gregory Stargell II
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