Loan Origination Rate
When you decide that you need a mortgage for buying a new house, you should do a research to get loan and interest quotes. You are the buyer of the loan and part of your financial responsibility is to shop for the best offer you can find.
Some may under estimate this stage in the mortgage or home loan refinance process. But every little bit you can save, that may seem too ‘small’ to argue about can sum up for a lot of money! If you manage by mortgage rate quote shopping to save $30 every month, it gathers to an impressive sum of $10,800 savings for a 30 year mortgage! So shopping is highly recommended.
The first step will be a process of pre-qualification with the loan officer who helps you through these first steps.
It is very common that the bank or lending company will ask the loan originator to supply certain credit, asset, employment, FICO score and housing information to a specified bank or lender to initiate the underwriting of the loan application.
In this process there is a need for documentation gathering, some research to be done, and th loan broker who handles this process will be managing it all. For this service and counseling the origination rate is set.
Loan originators are loan officers, mortgage brokers, or simply sales people. Loan origination fees is payed to the loan officers who do this process. A loan origination rate is a negotiable payment outside the mortgage loan payments. This originating loan fees, you will be asked to pay in cash at mortgage closing.
If you have enough cash on hands, it might be financial wiser for you to pay mortgage origination rate and not have them mounted on your mortgage, higher mortgage will carry interest rate for the whole mortgage life term, so paying outside closing (POC) can be a way to save money on a lower mortgage interest rate.
These mortgage points are paid to the loan officer who completes the loan transaction with the homeowner. Because these are part of your expected loan closing fees, you are in a great position for negotiation with the loan officer for a better interest rate.. or you walk from the deal…
So What Can You Do To Improve Your Situation?
The best advice is to bump your credit score up! It will give you better leverage when facing the lenders, and better negotiation position when applying for any financial need.
Lets not forget you are probably paying $500-$1000 extra per year in higher interest rates, and credit payments.
If your score is below 700, you might want to clean it yourself – get this ‘Credit Repair University’ which will save you money and time.
Yes, you might need to invest a small sum to get a grip of things.. But if you think education is expensive.. try ignorance..
You are probably paying thousands of dollars per year in fees and interests to credit companies which could be going straight to your pocket. Don’t be cheap when it comes to financial education..
Ignorance costs more.
Check here for more mortgage definitions.