$3000+ in Loan Origination Charges - Closing in 2 weeks - HELP

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$3000+ in Loan Origination Charges - Closing in 2 weeks - HELP

Varun Parkash

Jersey City, NJ · Member since 2017 · 124 posts · 13 votes

Hello Folks, i am working with a major bank and they have charged me $3024 in Loan Origination Charges for a 250K loan.

$1234 = Rate extension lock fee

$1357= Prepaids

$477 = Appraisals

$1095 = loan processing fee

They took $1792 from me in Dec 2017 for appraisals and initial fee and fooled me by giving 3.875 but in reality my rate turns out to be 4.25 and it will take me 7+ years to recover all this fee ($3024 + 1234 = around $4300). It is a standard 30yr FHA with 20% down.

What are my best options now? My closing is in 2 weeks.

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Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

These are not “loan origination” they are closing costs. Are you paying for two appraisals? I’m guessing you needed more time, hence the reason for the rate kick extension fee. Nothing else looks out order.

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Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
I doubt you have many options to ever get that money back
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Scott Rogers
Member since 2018 · 88 posts · 72 votes
8y
Weren't these fees all disclosed to you upfront? Didnt you read the whole contract and settlement statements?

In the grand scheme of things 4300 isnt a great deal of money, and if the deal (which you haven't disclosed) was properly vetted then you should be able to make up the money much faster then 7+ years. You will have increasing rents, property appreciation, tax write offs. ect.

If your going into the deal feeling you have been ripped off it will sour the whole experience. Move forward with your investment, and use the education you have received on this deal to better your prospects on future deals.
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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
8y
These are not “loan origination” they are closing costs. Are you paying for two appraisals? I’m guessing you needed more time, hence the reason for the rate kick extension fee. Nothing else looks out order.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Loan origination fee will be added to this.. if not they are making a yeild spread premium is how they are getting paid.
a loan company cannot stay in business unless they make 3 to 5k per file.. not possible. over head would kill them
if its a bank direct then thats different
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Wayne Brooks:

These are not “loan origination” they are closing costs.
Are you paying for two appraisals?
I’m guessing you needed more time, hence the reason for the rate kick extension fee. Nothing else looks out order.
The actual break-down is a scary $11,000 bill for closing costs and here's the breakdown:
1. Extended Lock Fee: $1233
2. Loan Processing Fee = $1095 3. Loan origination charges of $3024
4. Appraisal = $477
5. Title = $1374 6. Home Owner Insurance Premium = $1200
7. Prepaids = $1357
8. E : Taxes and other govt fee = $1143
9. $3420 property tax - which i obviously would pay regardless of lender or not.

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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Jay Hinrichs:

Loan origination fee will be added to this.. if not they are making a yeild spread premium is how they are getting paid.
a loan company cannot stay in business unless they make 3 to 5k per file.. not possible. over head would kill them
if its a bank direct then thats different
it is a direct big bank
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Varun Parkash:

Originally posted by @Jay Hinrichs:
Loan origination fee will be added to this.. if not they are making a yeild spread premium is how they are getting paid.
a loan company cannot stay in business unless they make 3 to 5k per file.. not possible. over head would kill them
if its a bank direct then thats different
it is a direct big bank
then other than interest rate that's a good deal.. although the bank Is paying their RMLO through yield spread this is not a none profit.
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Scott Rogers:

Weren't these fees all disclosed to you upfront? Didnt you read the whole contract and settlement statements?

In the grand scheme of things 4300 isnt a great deal of money, and if the deal (which you haven't disclosed) was properly vetted then you should be able to make up the money much faster then 7+ years. You will have increasing rents, property appreciation, tax write offs. ect.

If your going into the deal feeling you have been ripped off it will sour the whole experience. Move forward with your investment, and use the education you have received on this deal to better your prospects on future deals.
They termed it as estimated charges back in Dec 2017 and fooled around
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Caleb Heimsoth:

I doubt you have many options to ever get that money back
True, i am in the hole :(
Believe it or not, this is the second time i am taking a loan from these guys but its been terrible this time.
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Scott Rogers
Member since 2018 · 88 posts · 72 votes
8y
How tight of a deal did you make? Are you worrying about a few thousand dollars that will make you tens of thousands or more over the life of investment? If truly 4300 dollars is making that much of a impact then you made a bad investment. But I hope your deal is better then that and you just getting nervous. Dont let pennies keep you from picking up dollars.
1 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
8y
Originally posted by @Scott Rogers:
How tight of a deal did you make? Are you worrying about a few thousand dollars that will make you tens of thousands or more over the life of investment? If truly 4300 dollars is making that much of a impact then you made a bad investment. But I hope your deal is better then that and you just getting nervous. Dont let pennies keep you from picking up dollars.
The deal has nothing to do with it if you have to stand up from the barrel they've had you over when they are done. It's the basic premise of a square deal and expectations.
Considering the deal is hard money rationalization. Makes it hurt a little less, even if they don't call you in the morning but you are still whispering sweet nothings to yourself. 'Yeah they got me, but I'm gonna make so much on this who cares. Golly gee."
My last $250k loan costed me $3800, not including appraisal or prepaids. You got screwed, Varun. Who was it?
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Wells Fargo it is
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Sunny D.
Pleasanton, CA · Member since 2015 · 246 posts · 115 votes
8y
Originally posted by @Varun Parkash:

Wells Fargo it is
i have found chase to have lowest closing costs among big banks, next boa.
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Is there a difference of $2000 or more in terms of chase and BOFA charging the lower closing costs than Wells Fargo ?
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y

Originally posted by @Sunny D.:

Originally posted by @Varun Parkash:
Wells Fargo it is
i have found chase to have lowest closing costs among big banks, next boa.
I will have to get my score 775 run by Chase to see if they can offer anything better than the mess i am in.
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Sunny D.
Pleasanton, CA · Member since 2015 · 246 posts · 115 votes
8y
Originally posted by @Varun Parkash:

Originally posted by @Sunny D.:
Originally posted by @Varun Parkash:

Wells Fargo it is
i have found chase to have lowest closing costs among big banks, next boa.
I will have to get my score 775 run by Chase to see if they can offer anything better than the mess i am in.
i suggest go to a branch, ask to be seen by a private client or branch manager. show them ur wells statement and ask what they can offer.
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
On further research of my old documents with Wells, i found out that
Currently, i am being charged $1300 (rate lock extension)+492 (appraisal) + processing ($1095) +3024 (loan origination charges) +1234 (more rate lock extension) = $7145 to get 3.875 rate on a small loan of 245K - which is outrageous.
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Sunny D.:

Originally posted by @Varun Parkash:

Originally posted by @Sunny D.:

Originally posted by @Varun Parkash:
Wells Fargo it is
i have found chase to have lowest closing costs among big banks, next boa.
I will have to get my score 775 run by Chase to see if they can offer anything better than the mess i am in.
i suggest go to a branch, ask to be seen by a private client or branch manager. show them ur wells statement and ask what they can offer.
Good idea, you mean to say - wells loan summary statement or the one where they mention their outrageous closing costs?
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Scott Rogers:

How tight of a deal did you make? Are you worrying about a few thousand dollars that will make you tens of thousands or more over the life of investment? If truly 4300 dollars is making that much of a impact then you made a bad investment. But I hope your deal is better then that and you just getting nervous. Dont let pennies keep you from picking up dollars.
It's way more, here's the breakdown: Currently, i am being charged $1300 (rate lock extension)+492 (appraisal) + processing ($1095) +3024 (loan origination charges) +1234 (more rate lock extension) = $7145 to get 3.875 rate on a small loan of 245K
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Sunny D.
Pleasanton, CA · Member since 2015 · 246 posts · 115 votes
8y
Originally posted by @Varun Parkash:

On further research of my old documents with Wells, i found out that
Currently, i am being charged $1300 (rate lock extension)+492 (appraisal)+3024 (loan origination charges) +1234 (more rate lock extension) = $6050 to get 3.875 rate on a small loan of 245K - which is outrageous.
492 appraisal is ok and ignore the rate lock extension pricing. if you closed early then you wouldnt have those charges.
so its really on loan origination fees of 3k , its a bit high.
2500 on rate lock extensions, wonder if you just got a new rate how much would the monthly payment diff would have been. if it was say 50$ pm, you paid 50 months worth of the rate diff to get lower rate
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y

Originally posted by @Sunny D.:

Originally posted by @Varun Parkash:
On further research of my old documents with Wells, i found out that
Currently, i am being charged $1300 (rate lock extension)+492 (appraisal)+3024 (loan origination charges) +1234 (more rate lock extension) = $6050 to get 3.875 rate on a small loan of 245K - which is outrageous.
492 appraisal is ok and ignore the rate lock extension pricing. if you closed early then you wouldnt have those charges.
so its really on loan origination fees of 3k , its a bit high.
2500 on rate lock extensions, wonder if you just got a new rate how much would the monthly payment diff would have been. if it was say 50$ pm, you paid 50 months worth of the rate diff to get lower rate
Here's the actual breakdown:
Currently, i am being charged $1300 (rate lock)+492 (appraisal) + processing ($1095) +3024 (loan origination charges) +1234 (more rate lock extension) = $7145 to get 3.875 rate on a small loan of 245K - which is an outrageous price.
Even if i take out appraisal - it is still a $6653 price tag.
The reason its a 6 month rate lock and extension is because it is a brand new built (started construction Jan) and bank still should not charge me 2 times for the rate lock, if they don't give me any waiver of atleast 2k, i guess i am going to cancel this deal even if i loose the $1792 (non-refundable = 1300 for initial rate lock and 492 appraisal) money with this bank.
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Varun Parkash
OP
Jersey City, NJ · Member since 2017 · 124 posts · 13 votes
8y
Originally posted by @Sunny D.:

Originally posted by @Varun Parkash:
On further research of my old documents with Wells, i found out that
Currently, i am being charged $1300 (rate lock extension)+492 (appraisal)+3024 (loan origination charges) +1234 (more rate lock extension) = $6050 to get 3.875 rate on a small loan of 245K - which is outrageous.
492 appraisal is ok and ignore the rate lock extension pricing. if you closed early then you wouldnt have those charges.
so its really on loan origination fees of 3k , its a bit high.
2500 on rate lock extensions, wonder if you just got a new rate how much would the monthly payment diff would have been. if it was say 50$ pm, you paid 50 months worth of the rate diff to get lower rate
Yes $54/month difference on 245K amount at 4.25 versus 3.875 = it will take a good 10 years to recover the $6635
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Sunny D.
Pleasanton, CA · Member since 2015 · 246 posts · 115 votes
8y
Originally posted by @Varun Parkash:

Originally posted by @Sunny D.:
Originally posted by @Varun Parkash:

On further research of my old documents with Wells, i found out that
Currently, i am being charged $1300 (rate lock extension)+492 (appraisal)+3024 (loan origination charges) +1234 (more rate lock extension) = $6050 to get 3.875 rate on a small loan of 245K - which is outrageous.
492 appraisal is ok and ignore the rate lock extension pricing. if you closed early then you wouldnt have those charges.
so its really on loan origination fees of 3k , its a bit high.
2500 on rate lock extensions, wonder if you just got a new rate how much would the monthly payment diff would have been. if it was say 50$ pm, you paid 50 months worth of the rate diff to get lower rate
Here's the actual breakdown:
Currently, i am being charged $1300 (rate lock)+492 (appraisal) + processing ($1095) +3024 (loan origination charges) +1234 (more rate lock extension) = $7145 to get 3.875 rate on a small loan of 245K - which is an outrageous price.
Even if i take out appraisal - it is still a $6653 price tag.
The reason its a 6 month rate lock and extension is because it is a brand new built (started construction Jan) and bank still should not charge me 2 times for the rate lock, if they don't give me any waiver of atleast 2k, i guess i am going to cancel this deal even if i loose the $1792 (non-refundable = 1300 for initial rate lock and 492 appraisal) money with this bank.
banks have to hedge to ensure they dont lose money when rates go up. hence they charge for rare extension
on new constructions its preferred not to lock rate until its ready for possession. if you dont need to pay for rate lock extension if you walk away, suggest you go with new bank. 2 weeks is too short for a large bank to get ur loan ready to close.
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Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
8y
Originally posted by @Varun Parkash:

Wells Fargo it is
This is their business model. Lowest rate and closing costs quoted, but that isn't what is delivered.
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Izabella W.
Chicago, IL · Member since 2016 · 30 posts · 17 votes
8y
Average cost for closing fees (all in) is about 4.5k on a SFR (MFR is about 7.5k) in IL. Instead of going through a big bank, try your local credit union. Credit unions usually have more reasonable rates/closing fees and are generally more upfront about what they charge. Also, if you switch loan providers now consider how much money you will loose to Wells Fargo and factor that in to see if it's worth your time and aggravation to find a new lender.
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