topic Re: Questions about proposed FHA rates and terms from LO in Mortgage Loans

Questions about proposed FHA rates and terms from LO

Anonymous — Wed, 07 Oct 2009 13:19:18 GMT

Ok so I am working with a LO whom I know pretty well. I know he has to make his money, and I told him that...but he also told me that he will do his best to keep my costs low because he knows me. I just want to make sure he is being honest.

He told me he has to charge me something, or the lender would think something fishy was going on. He said there will be no points or broker fees in the loan. The most he will do is add on .125 to the FHA rate which he said will be around 5.0 I do not plan on paying closing costs so is this in my best interest? I didn't tell him I was going to ask for seller assist. I have not received a GFE yet, we are waiting for some paperwork on my wife's school loan payments. Would it be better to tell him to charge me up front and get the seller to pay it in closing? I also don't want the seller to think closing is high, and not want to pay it.

It will be an FHA loan with 3.5% down with approx. selling price of home 265,000. @ approx. 5.125

Re: Questions about proposed FHA rates and terms from LO

Anonymous — Wed, 07 Oct 2009 14:07:24 GMT

I just locked an FHA rate of 5% a few days ago. Instead of giving me a lower rate they lowered our origination fee from 1% to .125%. We are building so we don't have the option to have seller pay any closing costs. I was given the option of lowering my rate to 4.875 and paying the 1% origination fee, but that change would only save me about $13 in payments a month.

Re: Questions about proposed FHA rates and terms from LO

DallasLoanGuy — Wed, 07 Oct 2009 15:11:49 GMT

5.125% is paying the lender plenty.

Now, this varies by how the lender/loan officer have their commission split set up.

At my company, 5.125% would pay me OVER 2% of the loan amount in rebate. I would split that with my company.

Some loan officers may only see 1% - 1.5% in rebate.... but they may get a bigger share of that than I do in their commission split.

Regardless... the loan officer is making plenty.

Now... if you added 1% to the origination line.... you may be able to save .25% in rate. Which is 100% the way to go if you stay there lng enough. YOU have to really know how long you stay in the home before decidingto pay fees up front or let th loan officer roll the fees in the rate. There is a breakeven point in which you will be paying those fees over and over during the life of the loan.

LENDERS DO NOT WAIVE FEES!!!!!!! Even for friends. They just roll them into the rate.

Re: Questions about proposed FHA rates and terms from LO

Anonymous — Wed, 07 Oct 2009 15:22:04 GMT

He said he was going to get paid either way I just want to make sure it was still a good deal. Correct me if I'm wrong, but over 30 years wouldn't .125 only be 5013 extra dollars on a 265000 purchase price? So it should only raise my payment like 14 dollars a month.

If I am going to ask for seller assist does the seller pay the origination fee at closing or does that have to come out of my pocket? I plan on staying in the home at least five years, probably more. If I can have the seller pay origination fee then I may go that route. I also want my offer to look good, so I dont' want closing costs to be too high since seller is going to have to pay them.

thanks for your responses!

Message Edited by BrianJill23 on 10-07-2009 12:22 PM