Did you know that one of the most common mortgage mistakes is overpaying the origination fee? What is an origination fee? This is the fee you’re paying the broker or mortgage bank for arranging your mortgage refinance. Overpaying the broker can result in thousands of dollars out of your pocket at closing for no good reason. Here are several tips before you refi to make sure you don’t overpay the origination fee.
What is an Origination Fee?
The origination fee, also called origination points is the fee you’ll pay the mortgage broker, banker, or company arranging your mortgage refinance. This fee appears on your Good Faith estimate and HUD-1 Settlement Statement as the loan origination fee.
How much should you pay for loan origination? One percent of your mortgage refinance amount is a perfectly reasonable fee to pay for the broker’s services; however, since Yield Spread Premium is no longer allowed (Yield Spread Premium was a fee lenders paid brokers for marking up your interest rate) many brokers have begun overcharging for loan origination.
Keep in mind that all the fees you pay when closing on your mortgage refinance are negotiable and vary from one broker and lender to the next. Just because your broker and lender quote you fees doesn’t mean you’re stuck paying them. Don’t be afraid to haggle with prospective mortgage brokers and lenders for a better deal.
How to Spot a Dishonest Mortgage Broker
What are the tell-tale signs of a dishonest broker or an advantageous lender? Keep an eye our for a mortgage rate lock fee. If you find this fee on your Good Faith Estimate or HUD-1 it’s a sure sign that you’re dealing with a dishonest broker because rate lock fees are pure garbage.
You can learn more about avoiding lender junk fees on your mortgage refinance by checking out my free Underground Mortgage Videos.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
