Specifically, I am wondering what a reasonable loan origination fee is. I do have shaky credit that I have been working hard to rebuild, so my options for lenders is not all that broad. However, I also don’t want to get taken for a ride.
Therefore, I am wondering what is at least in the neighborhood of reasonable.
I would say anything under two thousand American seems reasonable. I just closed last month and payed about $1,800.
The list of costs is long and convoluted because you get credits for certain things. The exact figure depends on the house you get and how much you put down, but a round figure should be about $2,000 or less.
Well, the actual closing costs can easily be in the several-thousands. What you probably want to do is ask the seller to pay some of them. You can essentially finance theclosing costs by paying full price for the home (instead of haggling down the price) and asking the seller to contribute 3 or 4 thousand to closing. That will keep your costs down.
Also, you are going for an FHA loan, aren’t you? For a first time buyer with shaky credit, there is literally no better deal. Talk to your broker.
I work in title and escrow, and I’d be happy to give some advice. 
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Justin
Keep in mind I’m no expert.
I think Origination fees and aplication fees (and probably a few others) are just made up junk fees. This is (as I understand it) where many mortgage writers make their money because they usually sell off the mortgage soon after.
That being said, if I remember correctly my origination fee was 2 or 3 hundred bucks with no application fee.
There’s, of course, appraisal fees (around 3-4 hundred bucks)
title insurance- $1000.00
money to start an escrow account
fees to the absract company etc, etc…
I bet the Motely fool.com has lots of specific info on it.
It’s all unreasonable if you asked me. What are you paying for, a couple of copied pages, a staple, a signature?
My was in the thousands although I can’t be specific as I’ve blocked it out over time much like the cost of my wedding.
OK. Here’s the way it works. The mortgage broker does not actually lend you the money. They are the middlemen between the actual lender and the buyer. The only way they make money is by charging you a fee for the service. The lender will often sell the mortgage to another company, true.
The escrow company will charge for the escrow and title search. That generally is paid for largely by the seller of the property, with some of the title fees going to the buyer. There’s also commission fees to any realtors involved, again coming out of the sellers proceeds.
As to so-called “junk fees”, keep in mind that this is a heavily regulated industry. Escrow companies cannot simply make up fees. In fact, you’ll find that pricing among companies is virtually identical. Service is the only thing that sets the companies apart.
Oh, and Omni? I hope you’re kidding. There is an immense amount of work to be done to prepare the sale of real property. It is not padded in any way. For instance, every time property is sold, the title company combs through records going back hundreds of years, looking for liens, easements, judgements, etc. on the land, and it’s for your protection (and the lender’s). Do you really want to spend $200,000 on a house, only to find out that the previous owner never paid property tax, and you’re stuck with the bill?
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Justin
There in lies the money grab. It should have absolutely no bearing on the buyer what the PREVIOUS owner did or didn’t pay for. They should go after the previous owner then.
I realize that this isn’t the way it is. But boy, it should be
I actually work in the mortgage industry for what it is worth.
As for what “usual” closing costs would be it is hard to say for sure. There are a couple of different categories of fees.
Fees associated with your loan procesing or “standard” closing costs.
This would be things like:[list=1]
[li]title search $150-$200[/li][li]Appraisals $300-$400 [/li][li]closing fees $300-$350[/li][li]flood check fees,binders, and recording fees $150-$300[/li][/list=1]
there are ofen a few other sort of misc fees this group should not exceed the aforementioned $2000
Additional closing costs, things you may or may not be required to have to do the loan.
[list=1]
[li]Discount points, A point is 1% of your loan. Discount points are used to “Buy Down” your rate make sure to get a rate quote with and without discount points so you can compare.[/li][li]title insurance required in every case, will vary a normal amount is $4 for each thousand borrowed[/li][li]interim interest basically interest from the day you close the loan till the end of the month, avoid this by closing month end if you can[/li][li]Escrow- normally six months of taxes and insurance paid upfront[/li][/list=1]
As someone else said loan application fees and origination fees are junk fees in every case. I would not pay them at all.
If you have any specifics about the house you are looking at and where you are located I may be able to help some more, or email me at my profile.
Originally posted by Jsexton
As to so-called “junk fees”, keep in mind that this is a heavily regulated industry. Escrow companies cannot simply make up fees. In fact, you’ll find that pricing among companies is virtually identical. Service is the only thing that sets the companies apart.
I would have to disagree with you here. The regulations only say you can’t charge more than something actually costs so for set fees like appraisals and title search and so forth you can only charge actual cost, but for things like origination fees and loan application fees you can charge anything you want as long as you disclose and these sorts of fees is generally where the “abuse” comes in
Well, the burden stays with the property, which makes sense. The same is generally true for fines on vehciles and the like. But that’s what the title search is for. It will turn up things like that, and the escrow company makes sure that all those problems are taken care of before you sign for the property and take possession.
You’re right. I was not clear at all. I was speaking only about the fees that title and escrow charges (which are regulated), not the mortgage broker (which aren’t, as much).
Ok, about the title search: If I refinance my house every five or six years, why do they have to keep doing a title search of my credit report checks out. It all seems redundant.
The title search makes sure you still have a clear title to your property, no liens or anything have been attached to your property.
Yeah, but if the property has had a title search recently it seems excessive to charge the money they do. How much could it cost and time could it take to have someone do this research?
Don’t know about the state of Washington, but included in the closing costs here in NY is the dreaded mortgage tax.
Other than all the bankers and people from the legal profession who get their cut, the oddest closing cost item you’re expected to pay here are the +/- $100 in tips that go to 3 or 4 clerks that are at the table.
…from here
It goes on to talk about how they’re now discounting prices for refi’s due to the abbreviated work involved. That hasn’t seemed to happen in this area yet.
In the state of Oregon, you get 20% off if you refinance within three years. The reason the title search is done is to look for new liens that may have been filed against the property for unpaid taxes, missed mortgage payments, mechanics liens for work done (roofing, plumbing, etc.) personal judgements against the owner, unpaid child support, all sorts of things. It protects not only the homeowner, but the lender.
The cost for a title search, by the way, is not really meant to reflect the amount of work involved. It is literally an insurance policy, and as such, the cost is a premium directly linked to the value of the home. You are insuring the equity in your property against the possiblity of someone else having a claim to it. If the title company misses a legitimate lien, you are entitled to compensation up to the value of the property. That’s where the cost stems from.
The discount, then, does not actually reflect the reduced work involved. It is a result of the decreased likelihood that a lien has appeared in the time since the last search.
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Justin