Posts Tagged ‘loan officer fees’

Paid Outside of Closing (or POC) 2011

HUD-1 Costs Paid Outside of Closing

When you are in the process of a buying a home mortgage you ought to know all the expected fees and costs that are waiting to be paid outside of closing (POC) in the mortgage deal. In the  The Department of Housing and Urban Development – HUD RESPA forms several costs are mentioned and those are included in the mortgage loan, some are not on the list but will need to be paid outside of closing.

The best advice would be to self-educate yourself on mortgage loan tips. You do not need to be a certified loan officer, but the most valuable thing you can do, is learn from a former loan officer how to get the lowest rates, and avoid paying lenders ‘junk’ fees. Yes education costs, (not much) but ignorance is by far more expensive. Mortgage tips & tricks quick education program.

HUD and Homebuyers

The HUD RESPA is made for exactly this purpose, as from January 1, 2010 all the costs are expected to me mentioned and stated clearly. The payments and fees which are paid outside of closing (POC) are also mentioned in section 1400 at the HUD-1 forms. RESPA (Real Estate Settlement Procedures Act) is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.

HUD-1 or HUD-1A Settlement Statement

Before you go to settlement you are entitled to get what is called HUD-1 or HUD-1A statement of settlement costs. This HUD-1 or HUD-1A show all the costs, fees and charges you will have to pay throughout the life span of the mortgage settlement. In the HUD-1 you will see all the initial terms of the loan and each and every monthly payment due. In the new 2011 revised HUD-1 there is a better comparison ability between the HUD-1 and the GFE (Good Faith Estimation) you received with the mortgage quote.

What Closing Costs Include

The HUD RESPA has a specific list of cost which should be clear and correct when added to the closing costs of the mortgage, (“800″ series on HUD-1 form) within this list are:

• Loan Origination Fees,
• Lender’s Inspection Fee,
• Mortgage Insurance Application Fee,
• Assumption Fee,
• Title Charges
• And more..

Costs Paid Outside of Closing (POC)

There are several payments that are processed outside the mortgage and those need to be written at the POC section in the HUD-1 forms. These costs are usually payments of fees such as those for credit reports and appraisals. Those are funds you will need to add to your (ever growing) expense list and because they are paid to a third party (credit report check) and paid by you before the closing or settlement of the mortgage loan.

Many people are confused by this POC – Paid Outside Closing, because they pay money at the closing settlement and do not know what to include and what to exclude as POC. The rule of thumb is that any thing paid by the borrower at the closing table is not a POC item. Any thing you pay outside the closing settelment but are a must to complete the process and are not financed through the mortgage it self are POC, as they are paid outside the closing.

POC Conclusion

Fees that are payed by the lender (to their service providers) after the closing of the settlement are usually added to the loan itself and are not paid separately by you, so those should not be added to the 1400 section at the HUD-1 form as they are not – Paid Outside Closing.

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How to Negotiate Loan Origination Rates Down

 Negotiate Loan Origination Rates

Negotiating is not only for pros, you can negotiate yourself just about anything. You will never make money faster than around the negotiating table.

When you decide that you need a mortgage for buying a new house, you turn to find a lender who is willing to borrow his money to you. Like any other place where you find someone to outsource a job, that will cost you money. This origination fees are fair to be paid, but they are also like all mortgage closing costs.. negotiable – meaning they can be reduced even more by you.

Once you reach the end of this page, you will see a link to the most vital aid you will need right now – ‘Mortgage Loan Tips’. This program will teach you how to avoid paying lenders ‘junk’ fees and staying away from brokers ‘traps’, and why some people get the lowest mortgage rates while others pay much more!

What are loan origination fees? 

The first step to get your own mortgage and home loan will be a process of pre-qualification with the loan officer who helps you through these first steps. Since it is wise to get professional financial aid through this process turning to a loan broker or loan officer is the smartest move for you in this stage.

Before the bank or lender agrees to give you hundreds of thousands of dollars there is a simple qualification step to pass.

It is very common that the bank or lending company will ask the loan originator to supply certain credit, asset, employment, and housing information to a specified bank or lender to initiate the underwriting of the loan application. 

Loan originators are loan officers (mortgage brokers, or simply sales people) it is their job to make sure you get all the qualification papers and documentation right. They know what is important, what federal laws or countrywide blue print are needed, they can answer some taxation maters and understand in house and mortgage insurance. 

Loan origination fees are paid to the loan officers who do this process.

Mortgage Closing Costs Negotiation Tricks

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. So before you hire a loan officer, ask what are the fees that you will be needed to pay through the process?

1. The first rule of negotiation mortgage fees is information! Know what the average loan originating costs are. Search loan brokers’ websites and ask for an offer for service. Get at least 3 offers before you decide who to begin with.

2. The second rule of negotiation home loan costs is have a BATNA (best alternative than negotiated agreement) a secondary offer from a loan officer you might go with if the first deal will blow away. Having a second offer in hand makes you able to leave the table if your requests are not met.

3. The third rule when you negotiate mortage closing costs is – Always show disapproval from the loan officer first offer. Make a face, move in your chair, raise your voice in shock “what?! A thousand dollars! That’s way over what we planned to pay”

4. The fourth rule – immediately declare a number! Now stretch your limits! Try to ask for a ridicules percentage reduction. If the loan officer asks for 1000$… Don’t ask for a polite discount of 10%… (900$) Say you are willing to pay HALF! Now both of you KNOW you will meet somewhere in the middle… (750$)

Mention here you have another offer – your BATNA (don’t say how much fees they asked for there !) just say it is much lower than what you are asked to pay now…

Because the loan officer wants the deal and he is already involved deeply with you, watch him cut his fees lower than you imagined.

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More to know on origination fees and rates

#1 The origination fee is deductible if it was used to obtain the mortgage and not to pay other closing costs. The IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs and inspection fees, it is not deductible.

# 2 There are also Mortgage Discount points: These are actually prepaid interest on the mortgage loan. The more mortgage points you pay, the lower the interest rate on the loan and vice versa. So if you have enough cash on hand, you can pay them in advance and lower your mortgage interest rate.

# 3 Borrowers typically can pay anywhere from zero to 3 or 4 points, depending on how much they want to lower their rates. This kind of point is tax-deductible

# 4 If you have enough mortgage cash on hands, you can pay mortgage origination rate and save money on a lower mortgage interest rate. In any case you are in a great position for negotiation with the bank or loan officer for a better interest rate… or you walk from the deal…

Negotiating Fees Conclusion

While some people learn how to get lower rates, others pay usually much more… Invest in mortgage ‘tips & tricks’ education Check Here to Learn More.

Loan Origination Rate Explained

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.

Getting Pre-Qualification

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…

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