FORCED TO BUY POINTS

[Colette Major]

This is my fourth loan with this lender, one week from closing, my LOAN ESTIMATE includes a $5,500 fee for a 6. percent on a  loan of 308,000 1.804% of loan amount. (this is up from 5.77 on 4/6 no points)

He says "if you want the loan, you must pay this. Higher interest rates are not available".... What remedy do I have?

[Chris Mason]

Quote from @Colette Major:

This is my fourth loan with this lender, one week from closing, my LOAN ESTIMATE includes a $5,500 fee for a 6. percent on a  loan of 308,000 1.804% of loan amount. (this is up from 5.77 on 4/6 no points)

He says "if you want the loan, you must pay this. Higher interest rates are not available".... What remedy do I have?

 Others already talked about the advantages of locking up-front ASAP in a rising rate environment. 

As rates trend up, individual banks and lenders don't necessarily keep increasing the rates. Beyond a certain point the odds of the person (that's you) refinancing in 6 or 18 months gets higher and higher, representing a potential future loss of revenue. Once that point is reached, you're at the "top" of the rate sheet, and they bake it into points/fees/etc instead. 

iPhone prices are based on probability of getting 2 years of payments and that 2 year contract. If those 2 years of payments are less likely, they will increase the price of the iPhone. This is the mortgage version of that. Or we can use a car metaphor: they can give you a great sticker price (low points) on the car if it's likely they will make up for it on the car loan. Lo and behold, once in a while you hear a story about a CASH buyer having to pay a HIGHER price for the car, and that's why. Or, we can go right back to real estate: when you buy a new house from a developer, they're always going to give you bribe to work with their in-house lender. In effect, that's a price reduction, because they're going to make up for it on profits from doing your mortgage too. But if you go somewhere else for the mortgage, there's no more back end profits to them from the loan, so the house price goes up (via the mechanism of a lost "discount" or lost "incentive").