finding an honest mortgage and GFE review

[Anonymous]

Greetings all;

I am absolutley frustrated at the mortgage game!!  How do you get all the info you need w/o actually laying out $$ and "applying" for a loan?  It seems that I would want to know the "yield pt. spread" (or whatever it's called) so I can know what the actual broker compensation is.  For example, if a broker is quoting me a 1% origination fee and a rate of 5.5% how do I know I'm getting the best rate vs. paying a higher rate so the broker can take the kick-back from the yield/spread?  How do you recommend dealing with brokers who won't give a a rate quote and tell me "it depends on the loan and I won't know that till you submit an application" (and pay the app. fee...).  this seems like a load of crap!  or am I off base?  One co. quoted me 6% at 2.5 pts!!  yikes!!  Isn't there a difference between origination fee (pts) and buy down pts?  or does it ultimately all end up in the broker's pocket? 

here are 3 GFE's - any comments:  buying in So. Cal

Rate                             5.5                   5.5                      6

originiation fee             1180                1180   

broker fee                     595                 

appraisail                      450                  400                  350

processing                    795                  595                  585

underwrtiting                 595                  825                  795

Escrow 650                  700                  450

Doc prep                      200                 

notary   150                  150     

title ins  375                  700                  450

recording                      100                  75                    95

Admin                                                                          410

Total:                            5090                4625                3135

My fico @ 735; $5k debt on revolving cc's (total avail credit @ $13k); no other debt; I own another house outright and have @ $25k in avail funds;  income 65k.  Home purchase price $118; expecting 3.5% down

All rates requested on the same day. 

Now:  # 1 and # 2 are reasonably close - but it seems that $4600 - $5000 is a bit steep in fees!!  No. 1 is charging me an origination fee PLUS a broker fee - and will likely skim something off the yield spread.  # 3 seems to be lowering the "fees" by charging me a higher rate and taking his $$ off the yeild/spread. 

Thoughts??  Know an honest lender/broker?

Thanks in advance

Kelly

Message Edited by hondochica on 02-11-2009 02:21 PM

[DallasLoanGuy]

the 'kick back' is the difference between wholesale and retail rates.

walmart doesnt tell you how much they are making on their toasters. you go look and if you like it you buy it. if you dont, you go to target.

 no need to pay an app fee. some people use these to weed out th people who are looking or 10 gfes. me, personally, i do not charge up front.... but i have a nose for people seeking 10 gfes and do not waste my time.

 origination fee and discount fees are really the same for most. for a few lending outfits, it is a bit different because of the way they sell the loan.

 5.5% pays the lender about 2 points. give or take. (assuming 620 fico)

 how do you find an honest lender? your relator will know one. or a friend/family member who recently bought.

Message Edited by DallasLoanGuy on 02-11-2009 03:59 PM

Message Edited by DallasLoanGuy on 02-11-2009 04:00 PM

[Anonymous]

I really don't think brokers are as corrupt as you seem to make them out to be. They're doing a job and they get paid for that job. I doubt you'd be too happy if someone accused you of taking a kick-back simply because you have information that they don't (in a broker's case, rates, YSPs, etc). Information being a valuable commodity is the cornerstone of most businesses -- why should mortgage lending and brokerage be any different???

And what you call a "kick-back" is essentially their pay/salary. It's what puts food on their tables and keeps the roof over their head. 

I'm not a mortgage lender or broker, nor do I play one on tv. I just don't think it's fair to paint everyone within an industry with the same nasty brush. We have a few resident Mortgage Gurus who've helped oodles of people here (including myself and my husband -- we closed last month) and they do it selflessly. I can't imagine that they'd appreciate reading such comments alluding to those in the mortgage industry as automatically being such shysters (and forgive me, but that seems to be the implication in your post).

[Anonymous]

Sorry if you took my intent the wrong way. It was not my intent to suggest that brokers are "corrupt", it just seems inordinately difficult to figure out if I'm getting a good, honest deal.   I have no problem paying an honest wage for a job well done!  What frustrates me is that it seems impossible to get the straight scoop when shopping for a mortgage.  If a broker makes his living off the yield spread then why charge an "origination fee"?  and in one case an additional broker fee.  When I bid on a contract (I am self employed) I tell my potential client EXACTLY what it will cost them upfront and I tell them EXACTLY what they are getting for their money.  If I don't anticipate the costs properly, I eat the difference or I don't charge the client the full amount quoted.  I don't see that level of information in the mortgage industry.  Why not just tell me upfront what a particular loan will cost me and tell me where the money is coming from.  Am I paying the broker in order to run my application secure a loan and get a reasonably low rate, or is the broker getting paid by the lender for selling a loan with a higher rate, which ultimately affects my bottom line.  It does not seem unreasonable to expect this from any type of purchase; and particularly where I may be paying $4-5 THOUSAND DOLLARS for the "privilege" of getting a mortgage (as one broker suggested).  Maybe it is a privilege, but that attitude didn't win that broker a client!  $4-5 thousand dollars is not chump change.  I'm just trying to figure out if I am spending my hard earned money wisely. 

respectfully

hondochica

[Anonymous]

see this link to another Q on this board:  http://ficoforums.myfico.com/fico/board/message?board.id=loans&thread.id=32663

this is exactly what I'm talking about; I can't seem to get any close to 4.8% with only $1800 in closing costs (including origination fee) and they have a higher loan!  I'm getting $4000-5000 in fees! THIS IS NUTS!!  their credit score is in the 600's mine in the 700s!!

ARRGGHHHH!!!!!

[Anonymous]

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hondochica wrote: 

Rate                             5.5                   5.5                      6

originiation fee             1180                1180   

broker fee                     595                 

appraisail                      450                  400                  350

processing                    795                  595                  585

underwrtiting                 595                  825                  795

Escrow 650                  700                  450

Doc prep                      200                 

notary   150                  150     

title ins  375                  700                  450

recording                      100                  75                    95

Admin                                                                          410

Total:                            3615                3000               1730

---

The fees in red are NOT lender's fees -- they are fees paid to third parties and the lender has NO control over those fees.

Also, fees like "application fee," "lender's fee," etc, can be negotiated. I was able to with our lender.

Think of it like you're buying a car -- you don't pay list price right off the bat, do you???