Posts Tagged ‘mortgage points’

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.

If you are a step away from a mortgage loan, stop and do not do another move, before getting the Mortgage Loan Tips – It will save you more money than you ever imagined, with some mind blowing insights only professional mortgage brokers know.

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.

Mortgage Closing Fees & Costs Explained

Mortgage Closing Costs

When taking a mortgage and calculating whether you have enough money to buy the house, there are other closing mortgage costs that you must know of before. 

Except the sales price of the home, there are a many other costs needed to be paid prior to the completing the mortgage deal.

What are mortgage closing costs

There are many mortgage closing cost, which can change from a person to person, and from one mortgage to another. Here are the main loan closing costs associated with the mortgage loan.

You should know most of them are worth negotiating terms to lower the costs.. the money you will have to pay will be needed as cash on hand payments before the mortgage is even given.

You should shop carefully and examine all the fees and terms prior to closing. It is generally too late to change those fees and terms at closing.

1. The Real Estate Agent fees – It is common that the buyer pays for if he used a real estate agents to find the property he buys. The amount usually stated as a percentage of the price of property, and can be negotiated before the agent gets to work.

2. Loan Origination Fee -The money is paid to the loan officer who handled the mortgage deal and worked through the whole documentation process. The amount is usually a flat dollar amount.

This “application” fee and an “underwriting” fee either to take the place of or be in addition to a mortgage origination fee.

3. Loan Discount Points or Mortgage Points -  This is a one-time charge by the mortgage lender in order to give you a lower interest rate on your loan.  The idea is that when you pay 1% of the loan upfront, you lower the risk or the lender which makes it worth giving you the mortgage interest discount.

Its a simple calculation to find out whether it is better paying the mortgage point upfront or stay with the current interest rate on your loan. 

4. Appraisal Fees- Because the lender has to get money valuation estimate for the property you wish the mortage for. The bank will  ask  independent, certified, licensed appraiser to visit the property and make an evaluation. The appraisal fee covers the cost for this visit, and are negotiable since it’s an independent appraiser who will be coming.

5. Credit Report Fees- Those are payed in advance while getting your credit score from the bank. The lenders companies will require a credit report to determine how risky it would be to give you the mortgage. It is this credit score that will influence the mortgage interest rate, and the terms of the mortgage loan you will get. This score is some estimation on your financial ability and willingness to repay the loan. The higher your credit score, the better chances for you to get a good loan.

6. Mortgage Insurance Application Fee – While asking for the mortgage, you will need in some cases to get an insurance application fees. Those fees are part of the money on hand you need to keep as part of the closing costs for the loan.

Check here for more mortgage definitions.

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…

Check here for more mortgage definitions.