I have signed with a mortgage broker as of last Tuesday.  The initial mortgage rate quoted was 5.75.  My FICO is 825.  My husband, co-borrower has a 715 FICO.  The purchase price is $162,500 with a loan amount of $122,000.  Last Thursday she emailed with a lessor rate of 5.625.  We are not paying any points but paying a 1% orig. fee.  The GFE totaled $5400? 

Is 5.625 the best rate I can expect with my FICO?  Also I'm thinking closing costs of $5400.00 seems really high.  I haven't locked in yet and closing won't be till mid to late July.

Yes it seems awfully high Deb.....Par is at 5.25% today with no points.

Closing has a lot of factors to it, check the GFE well to see where all have they charged, take an account of al thosfees besides the origination and discount that they have chaged you for the rate which again is outrageous!!! So keep you eyes open before you decide to lock.

Im sorry i missed one thing, you said you aren't paying points for the rate, You should get a 5.25% at that if you are paying a 1% origination. As 5.625% will give your mortg broker/banker about a $1500 as compensation from the bank plus the other fees that he/she is charging you on GFE..namely origination/broker/app etc will add up for her. All tht should end up you getting about a $2500-$3000 only for broker fee, besides the tax/title/prepaid interests etc....watch out!

Deb,

Your total GFE cost is pretty standard. If you're in a state that requires an attorney and your GFE includes hazard insurance, tax escrows, title, closing, lender fee's your in an acceptable range. Also if everything isn't final number (actual title company costs, daily interest, insurance) then it may go up or down.

As far as your rate goes because your loan size is smaller I would expect to see .125% to .25% higher interest rate simply because compensation is based on percentage. The previous post stated some expected totals based on the rates you were quoted but that only assumes your broker has access to the best lenders at all times and your loan is being underwritten at the best rate investor (which changes from day to day).

Compensation is fully disclosed now and more than likely you've signed something that says the expected range your broker would change, either upfront or in combination with yield spread/release premiums lenders pay. If you have questions just ask your broker how much compensation they expect to make on your loan (such as 1% origination and 1% back end premium). Then ask what rate you would get if you paid 2% origination and they locked you at par (no premium paid from the investor). For example today I would quote 5.375% paying 1% premium (by the way 5.625% only pays 1.50%) and 1% origination. For 2% origination I would quote 5.125%.

Since your loan to value is around 75% you won't sacrifice anything to your rate or loan by putting $1,220 less down and getting a lower rate. In the long run you'll save more money.

Have a great week

Too high- tell your Broker you're agressively shopping and get a rate closer to 5.25%. Same origination, minimal garbage.

Bob V-G:

Too high- tell your Broker you're agressively shopping and get a rate closer to 5.25%. Same origination, minimal garbage.

Of course none of us have seen the good faith estimate and we don't know what state you live in and we don't know the actual closing date to know the term of the lock and the 3rd party costs so we don't know what's garbage and what's not. Making a flat statement that you should have a lower rate is a bit irresponsible.

Talk to your lender. Find out what they expect to make on a loan (like I said earlier, they more than likely did disclose) and if it's to much for the services they provide then go some place else. If the value they provide is worth what they charge then you're good to go. Mortgage companies are for profit and should be compensated based on the service they provide and the value you put on that service.

It's capitalism at it's finest. Something of value in exchange for something of value. Only works when both sides agree.

Clem Borkowski:

Of course none of us have seen the good faith estimate and we don't know what state you live in and we don't know the actual closing date to know the term of the lock and the 3rd party costs so we don't know what's garbage and what's not. Making a flat statement that you should have a lower rate is a bit irresponsible

How so Clem?   2pts on any deal is plenty in my opinion and I believe that's what I gave--my opinion.

When you say $5400 in closing costs, is that the total settlement charges including taxes and insurance to set up an escrow account or is it just the origination, title, tax, and other 3rd party fees?

The escrow account set up is not a "cost", as you will pay those fees regardless of whether you finance or not.  They are a settlement charge because money would be needed today to close the loan; but the escrow account would pay those items when they come due.

The reason you are getting conflicting advice is that we are not clear on what the loan is really costing you.

Clem, I have signed the papers with this broker and appraisal has been ordered.  I can't break the contract with this broker to shop some place for a lower interest rate can I? 

If I ask the broker how much she will clear from my loan won't she get upset with me?  Can I quote what the VA mortgage rate is in hopes of getting a better rate?

It's been a long time since I've bought a house, 20 yrs, so I am out of the loop on all the mortgage quotes.

Hold up! As has been noted by only a couple of entries here: it is impossible to comment on the $5400 closing "costs" without seeing the actual GFE.

1. Closing "costs" are distinct from "cash required at closing"

2. Closing COSTS are the items that you pay to enable the transaction and include: points, appraisal, credit, underwriting fees, closing attorney fees and recording fees if this is a purchase.

3. Other remaining CASH required at closing reflects items that are NORMALLY PAYABLE IN THE COURSE OF HOME OWNERSHIP, and include:
- Prepaid interest (could be up to 30 days worth)
- Taxes due
- Homeowners insurance due

I make this point only because when borrowers are comparing, they have to separate out the closing costs from those items that they would be paying even if they did not refinance.

GFE of Closing Only Fees:

Deb, that all sounds about right. Thanks for sharing your GFE.

Those fees look reasonable.

Deb White:

Clem, I have signed the papers with this broker and appraisal has been ordered.  I can't break the contract with this broker to shop some place for a lower interest rate can I?

Deb,

In most states you're not locked in with your broker until you close. The appraisal if completed will be a cost if you were to go elsewhere because under the new HVCC program the next lender won't be able to use that appraisal. Something to take into account if you're shopping around. If they appraiser hasn't done the inspection of your home yet then you could cancel and shouldn't have a cost associated with the cancellation.

You mentioned VA mortgage rates, are you doing a VA loan or do you live in Virginia?

And last but not least, you're broker may get upset because you're asking questions but you're the client and that's your right. There are a lot of variables that go into your interest rate and just because she's quoting something higher than what you've seen doesn't mean she's a greedy lender. I've got investors/banks that are offering par rates from 5.25% to 5.75% and everything in between. Your loan may simply be at a lender that your broker picked that's not currently offering the industrys' lowest rates. And because of back logged underwriting times and the HVCC system most often going to a better lender isn't an option.

In short, just ask her where rates are and what her compensation will be at the quoted rates. Not so you can beat her up on earning a living but simply to know if she's doing what's reasonable. Did you look at the documentation you signed to see if a fee disclosure was completed?