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I am being charged way too much for loan origination fee!!! How much should loan origination fee be?

My credit is excellent...over 800+, I am putting more than 30% down conventional loan, no PMI, of course... had to pay one point for multi family dwelling, but on good faith estimate, it states 2% for loan origination fee, which is in addition to the point. What the heck??? I'm being ripped off, right? I had to pay a $350 "application" fee,etc. This loan is through a major bank, not a mortgage company. I locked in at the rate that anyone would have gotten that same day, so I didn't get "special treatment." What is typical? Can they really charge this much for a loan origination fee and what can I do? 2% seems entirely too high! Thanks, Brad.
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March 17 2010 - US
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With the new GFE the origination is no longer limited to a simple 1% fee. Since the fees are not broken down, it adds confusion to the borrower.  Hopefully your lender has also provided you some sort of break down of how the costs are translated to this new form.  The "origination fee" that is now shown, includes the lenders origination, processing fee, underwriter fee, wire transer and others.  And for a broker, it will even include any rebate that will be credited to you the borrower.  This total in the "origination" box cannot change during your transaction.  Unfortunately, the new form simply adds more confusion for the borrower.  HUD created a 52 page "explanation" to help the borrower understand the new "simplified" version!

So depending on you loan amount, if it is owner occupied, etc, we cannot tell if you are being rip off.  Ask your lender for a breakdown so you can see we all the money is going.
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March 17 2010
Profile picture for eagle120
I had it "broken down" for me. Thanks for the advice everyone. It does now include underwriting, application fee, etc, etc... Had a few fees removed. It seems that everything is negotiable in this world because there are always other lenders out there willing to do business with you. Someone said that this now just "confuses the buyer" and it certainly does. It makes matters much worse. Hopefully the GFE was just a worse case scenario.
Thanks to everyone who took time out of their day to contribute!!
-Brad
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March 20 2010
second opinion on Carl's answer. 1 pt for 4.75% (we're at 0.875 pt, but close enough) and then 1 pt for 2-unit.


if you want to make it 1 pt total, call them back and have the rate changed to 5%.
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March 18 2010
Sounds like your are about right on the price. 4.75% with 1.0% origination and 1.0% for two units = 2.0% points.  I don't think anyone is offering 4.75% at 0.0% points, but I could be wrong?  Is this a 30 year loan and two units or more units?  As for what they can charge the can charge what ever they want. What you may have paid in the past is history, times have changed and new pricing adjustments apply to today's loan programs.
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March 17 2010
Maybe you just went to a greedy bank. Shop around angry man. There is more than one source for Mortgage loans. The Bottom Line is, that we don't know. If you aren't getting satisfactory answers from your LO, find another one. It sounds to me, like they are trying to dissuade you.
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March 17 2010
by "the same rate being offered..." do you mean for the same product and property type, or do you mean for a 'standard' Owner Occupied SFR? 

AA identified the Conforming pricing adjustments for NOO and multi unit.  normally clients are simply offered a higher rate to cover the additional fees for this type of transaction.  Which is more likely the case than you being over charged.
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March 17 2010
Profile picture for eagle120
Borrowing 75K, owner occupied. Still somehow I know that I am getting ripped off. Looked through several old mortgages that I have had and never had closing costs amounting to this for loans much higher with way less money down. The point has nothing to do with this like I said, it is because it is a multi family property, I did not buy a cheaper rate, again, like I said in the original question, I GOT THE SAME RATE BEING OFFERED TO ALL CUSTOMERS ON THE SAME DATE 4.75%. If it was being offered to everyone that day, why would I have to pay more?? That still doesn't seem right? Am I right to question that amount? Brad
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March 17 2010
I am going to bet this is an investment property...

1% for Multi
1.75% for Investment with <75% LTV

2.75% in Add-ons
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March 17 2010
My best advice is to submit a loan request on Zillow and sort through your best offers based on lender ratings. Zillow confirmed lenders are very conscious of their "reviews".

Your due diligence should pay off with the best conditions the market has to offer.

The only thing lenders ask is that the borrower provide accurate details pertaining to your scenario in order to provide accurate quotes.

You have come to the right place for advice! The answer is in sight!
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March 17 2010
Also it is all relative to the rate the you are being given.  The 1% for the multi family is standard but I would get a better explaination on the other 2%.
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March 17 2010
Your loan origination fee is generally 1% of the loan amount.  If you are looking at buying your interest rate down then they will probably charge you an additional 1% which may be why you were charged 2%.  I would call your mortgage lender and find out if this is what happened to you.  If they are just charging you 2% then I would try to negotiate with them to bring this percentage down.
Thanks, Jo
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March 17 2010
It would help to know the loan amount.  2% of 100,000 is a big difference to 2% of 500,000.

Large bank retail origination is almost always more expensive than what a broker or direct correspondent lender can offer.
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March 17 2010
 
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