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Question about Mortgage Fees


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#1 Janet

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    Posted 28 June 2007 - 06:19 PM

    Hi ladies,

    We have so many girls on the board who are so smart, I'm hoping you can help me out.

    Hubby and I are searching for our first home to buy and getting preapproved for a mortgage and all that junk. OMG it's so expensive and there are so many things involved, it's a little overwhelming. So I want to be educated throughout this process and not get duped into paying for stuff because they think I am stupid.

    For those of you who have experience buying a house or experience in the mortgage industry, what kinds of things should I negotiate in terms of mortgage fees?

    For instance, the $75 "courier fee" at closing - that is one that I have heard is kinda bogus and you should try to get taken off. What else? I know to try not to get a loan with any "points" because that is basically cash in their pocket at the end of the day.

    Basically, I just want to sound smart and savvy when I talk to the bank so they don't screw me around. Any advice?

    THANK YOU!!!

    #2 Christine

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    Posted 28 June 2007 - 06:27 PM

    oh great thread Janet, where are you and Andrew looking? I want to stay in Alexandria, but I am afraid we will have to look outside the beltway...yikes
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    #3 Jessalyn

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      Posted 28 June 2007 - 06:27 PM

      Janet ~ I'm in the mortgage business. About the points, you might want to consider paying one. A zero point loan carries a higher interest rate. The point cost allows you to buy down the interest rate, and since your buying your home as your primary residence, you should be able to write off (deduct from your taxes) the points that you pay on the mortgage at the time of purchase. You'll also be able to deduct the property taxes and the interest that you pay on the loan....the point is considered interest on your tax return for the purchase of your primary residence.

      You want to look closely at your good faith estimate to see how many points you are paying and also look for a line called "yeild spread premium" or "rebate" ....these represent money paid to the loan officer/broker at the close of escrow from the investor...you will see these items if you choose a no point loan, as the loan officer/broker will be paid one way or another...either by you, through points or by the investor in the form of a rebate/yeild spread premium.

      I would advise you to pay a point since it will be tax deductable and will lower your interest rate and thus your mortgage payment...but, I'm not a CPA.

      Hope that helps a little. :)
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      #4 Janet

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        Posted 28 June 2007 - 07:47 PM

        Quote:
        Originally Posted by Christine
        oh great thread Janet, where are you and Andrew looking? I want to stay in Alexandria, but I am afraid we will have to look outside the beltway...yikes
        Christine, right now we are looking in DC and in Montgomery County. Hello NOT CHEAP! We will either be in a gentrifying neighborhood in a condo or in a teeny tiny house that will need a lot of work. But hey, we are young, childless, and in love, so we can tackle anything, right?!?!? :)

        #5 Janet

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          Posted 28 June 2007 - 07:50 PM

          Quote:
          Originally Posted by CABOBRIDE200
          Janet ~ I'm in the mortgage business. About the points, you might want to consider paying one. A zero point loan carries a higher interest rate. The point cost allows you to buy down the interest rate, and since your buying your home as your primary residence, you should be able to write off (deduct from your taxes) the points that you pay on the mortgage at the time of purchase. You'll also be able to deduct the property taxes and the interest that you pay on the loan....the point is considered interest on your tax return for the purchase of your primary residence.

          You want to look closely at your good faith estimate to see how many points you are paying and also look for a line called "yeild spread premium" or "rebate" ....these represent money paid to the loan officer/broker at the close of escrow from the investor...you will see these items if you choose a no point loan, as the loan officer/broker will be paid one way or another...either by you, through points or by the investor in the form of a rebate/yeild spread premium.

          I would advise you to pay a point since it will be tax deductable and will lower your interest rate and thus your mortgage payment...but, I'm not a CPA.

          Hope that helps a little. :)
          Jessalyn, thanks. All of this is slowly starting to make sense. Emphasis on the slowly :)

          So you think if I am quoted 6 5/8% on a loan with 0% origination and no points, that I should consider trying to get like 6 3/8% with some fees instead? I guess I need to get a couple of quotes and compare them in real dollars.

          What about for the fees at closing that they tack on, like the processing fees and all that stuff - are those negotiable?

          #6 Nrvsbride

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            Posted 29 June 2007 - 04:45 PM

            Ahhhh this all sounds like ancient egyptian to me. I don't understand it! And I really do need to understand it b/c my FI and I are going to look at apartments tomorrow. My cousin is a loan officer so I plan to get my mortgage through him but I swear I don't understand how any of this works. What the in the world are points? And what is orgination? Jeez it took me long enough to understand PMI's. LOL. Oh brother I am clueless on this stuff.

            ~Janet best of luck with the house hunt, I feel your pain everything is so expensive!

            #7 Heidi

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              Posted 29 June 2007 - 04:48 PM

              um, yeah, I need to get in on this conversation too.... I'm right there with you Glenda!!!
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              #8 Janet

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                Posted 29 June 2007 - 05:15 PM

                I know - it can be super overwhelming. I tried to start small. For instance, I read the Real Estate section in the Sunday paper. Or the personal finance column. Things like that. Baby steps :)

                Also, I don't know if they have this where you live, but we went to a free homebuyer workshop that is run by a nonprofit group called NACA NACA - maybe you can see if there is one in your area. We learned enough to make it worth 4 hours of our Saturday at least.

                #9 Nrvsbride

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                  Posted 29 June 2007 - 05:20 PM

                  I also read the real estate section of the NY Times, but honestly it seems like there is a plethora of information out there and it is impossible to keep up. Not only is there mortgage stuff to learn but co-op and condo rules as well. For instance we are going to look at co-ops tomorrow and I am wondering if all co-ops require 20% down. I know most do. If this is the case there is no way I could buy one. I would need $80,000 to $100,000 just to put a down payment. No way!

                  Okay I am officially stressed.

                  #10 Janet

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                    Posted 29 June 2007 - 05:25 PM

                    Co-ops are much more popular in NY than DC, so I don't know much about them. From what I've heard they are harder to buy because you have to get all kinds of approval, and basically open up all of your finances to scrutiny.

                    We also cannot put 20% down so we will probably have a 1st mortage for 80% and a 2nd mortgage for 10% at a slightly higher rate.

                    I think the most important thing you can do is have a high credit score because you will get the best interest rates. You can call any mortgage lender or broker to get "pre-approved" and they will ask you for all your info, run the numbers, and then you can ask them what your credit score is (for free!) and they will give you some scenarios about how much you can borrow at what rate, etc. Good luck tomorrow! Don't stress because there isn't a hurry to buy until you are READY!




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