Help with mortgage broker fee understanding

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Coa1z
Posts: 6
Joined: Fri May 11, 2018 8:22 pm
Location: California

Help with mortgage broker fee understanding

Post by Coa1z »

Hi folks,

I am trying to understand if I am getting a good deal with my mortgage broker. Im purchasing a mortgage for my first home.

Loan amount: $709k
15% down at 2.99%
0 closing costs (all payed by lender credits) except for a 7500 origination fee for broker compensation that I pay at closing.

Is this unusual for a broker to ask for this much? Overall expenses to me for this doesn’t seem too bad because my closing costs including this origination fee comes in under 1% of the purchase price. I’m just not sure how to look at it. Does this seem like a good deal? Any other factors needed?

Thanks.
Cigarman
Posts: 347
Joined: Fri Jul 12, 2013 5:12 am

Re: Help with mortgage broker fee understanding

Post by Cigarman »

So if I read this correctly, the $7500 is on top of the mortgage. I have refinanced 5 times in 20 years with the same broker and my refi amount always equaled the payoff amount of my mortgage. So it would appear as if you are paying their commission out of your pocket, which I have never done. If it was me, I would shop it around for a true "no closing cost" mortgage. Per advised, some companies advertised "no out of pocket costs" and they roll the fee's into the total amount of the mortgage. That is not a "no closing cost" mortgage.
Jags4186
Posts: 5119
Joined: Wed Jun 18, 2014 7:12 pm

Re: Help with mortgage broker fee understanding

Post by Jags4186 »

Coa1z wrote: Fri Sep 11, 2020 12:11 am Hi folks,

I am trying to understand if I am getting a good deal with my mortgage broker. Im purchasing a mortgage for my first home.

Loan amount: $709k
15% down at 2.99%
0 closing costs (all payed by lender credits) except for a 7500 origination fee for broker compensation that I pay at closing.

Is this unusual for a broker to ask for this much? Overall expenses to me for this doesn’t seem too bad because my closing costs including this origination fee comes in under 1% of the purchase price. I’m just not sure how to look at it. Does this seem like a good deal? Any other factors needed?

Thanks.
I wouldn’t pay $7500 to close. What you need to do is accept a higher rate to get the fees down. 3.25% should generate you $7100 in credits taking your out of pocket down to $400.
Admiral
Posts: 3013
Joined: Mon Oct 27, 2014 12:35 pm

Re: Help with mortgage broker fee understanding

Post by Admiral »

I would not pay that fee for THAT rate, because that rate is commonly available on the Internet.

I would only pay (and have only paid) broker fees when the rate they were able to get at the time was significantly less than a non-brokered mortgage, because I eventually recouped the fee by paying less interest.

The breakeven point may be quite a while, however, so using a broker is rarely advisable unless you're planning to be in the house long term.

Did your broker offer you a mortgage from United Wholesale Mortgage (broker only)? Their rates are (or were, a month ago) much lower than 2.99%.
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