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We're working with a loan officer in NY who has done business with our family in the past. We're getting an FHA loan. There is no loan origination fee on our GFE, but we're being charged 1 point (in our case, a little under $5k) for the loan discount fee (line 802). Our LO said this is normal, reasonable and expected for banks underwriting FHA loans.
As much as we do trust the LO, I like to have more than one point-of-reference.
Can anyone comment on what to expect here? Our other 800-series charges are the appraisal, and then $350 each for the processing, underwriting and application fees and nothing else.
But since we've asked not to buy-down the rate, why wouldn't the 1 point fall under origination?
Our story: over 800 FICO scores, $480k loan in high-cost area.
This is unacceptable. you need to seek clarity from your officer. what rate were you given?
The base rate under which our committment was written is 5.25%. To accept the commitment, we're supposed to pay a non-refundable 1% (around $5k) which is then "credited to points or closing costs" at closing. We're not locked on a rate.
Of course, that's just a deposit to secure the commitment. We're still being charged 1% for a loan discount fee in line 802 and I'm not seeing anything in the paperwork that says that we're getting a lower interest rate as a result. Is that simply built-in to the interest rate on the GFE?
We could pay a point to reduce our rate -- as long as it's reducing our rate -- but the biggest consideration is that we're first-time homebuyers and we need at least $60k to cover our down payment, prepaids and closing costs, and that's without points. Assuming that we also need to have money left over for savings and money to make basic fixes, paint, etc... we need $90k-$100k to seal the deal.
Would we be "forced" to pay a loan disount fee to obtain this loan because it favors the lender? It's a little easier to figure this stuff out when the lender's profits aren't so obscured. I guess I was under the impression that paying points was an option, not a requirement, of the loan offer.
THANKS! I'll be talking to our trusted LO, but again, it's helpful to have more than one source of information on this.