Is my loan origination charges high or normal for this current market?

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Is my loan origination charges high or normal for this current market?

Ryan Duphorn
Rental Property Investor · Richmond, VA · Member since 2018 · 23 posts · 17 votes

$269,800 loan. Loan origination charges are $4,670 (origination fee) and $1055 (underwriting fee). My loan is a 5% down owner occupied conventional loan at 7.5% interest. At first glance, this seemed high to me but I'm not sure if it's because of the current mortgage market / industry as a whole. I'm already under contract with a less than 30 day closing timeline so time isn't quite on my side.

I pulled up my closing costs from my last home purchase in Nov of 2021 and it was $1200 for a 3% down conventional owner occupied loan at 3.25% interest. Again, not sure if the market has shifted.

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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
2y
Quote from @Ryan Duphorn:

$269,800 loan. Loan origination charges are $4,670 (origination fee) and $1055 (underwriting fee). My loan is a 5% down owner occupied conventional loan at 7.5% interest. At first glance, this seemed high to me but I'm not sure if it's because of the current mortgage market / industry as a whole. I'm already under contract with a less than 30 day closing timeline so time isn't quite on my side.

I pulled up my closing costs from my last home purchase in Nov of 2021 and it was $1200 for a 3% down conventional owner occupied loan at 3.25% interest. Again, not sure if the market has shifted.


 Hey Ryan, 

Your lender is charging you less than 2 points which is pretty low. Most lenders charge 2.25-2.5% on a loan amount that size. 

If you are working with a broker, you can price the loan lender paid, so you don't pay any origination fees. However your interest rate may be higher if you do that. 

Can you get a seller concession? Depending on the down payment you may be able to get 3-6% in sellers concessions to cover your closing fees. 

[email protected]818-269-7983
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  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    3y

    The world is indeed different, but could you actually break down the Origination Charges in section A? Is there an underwriting fee, origination fee, loan discount fee? What are those individually? Is the lender buying the rate down with a discount charge in section A? A $1055 underwriting fee means the lender is brokering you through UWM as a lender. That's a unique number that is kind of a fingerprint for them. Also, is this loan in VA? The credit score is also going to have an impact on the rate, but I won't ask you to publicly post that. Bottom line is if you can break down the charges in Section A, which would include that origination fee, then perhaps we can directly answer how great of a deal you're getting.

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  • Ryan Duphorn
    OP
    Rental Property Investor · Richmond, VA · Member since 2018 · 23 posts · 17 votes
    3y

    @Doug Smith In my post I mentioned the origination fee is $4670 and the underwriting fee is $1055. No rate buy down. Not a veterans loan. My credit score is excellent.

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  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    3y
    Quote from @Ryan Duphorn:

    @Doug Smith In my post I mentioned the origination fee is $4670 and the underwriting fee is $1055. No rate buy down. Not a veterans loan. My credit score is excellent.

    Just clarifying. I didn't mean a VA loan...I was asking if the property was in Virginia. Their fee is a wee bit shy of 1.75%, which is what the broker is making. That's pretty reasonable. It depends if they are a broker or a lender, which we don't know. Lenders can bump the rate without disclosing it to make additional money. A broker can't do that. This looks like a broker is doing it and they are charging you the "par rate" going with that they call "Borrower Paid Compensation". That's the $4670. Brokers work a lot harder than people think, but can't charge as much as a realtor sometime does. That being said, the rates have been really volatile. Your credit score and the date of the lock are going to have a lot to do with whether you are getting a solid deal or not. Just with what I know, I don't see that they are necessarily taking advantage of you...but I would have to know more to answer whether or not you're getting your best deal. 
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  • Ryan Duphorn
    OP
    Rental Property Investor · Richmond, VA · Member since 2018 · 23 posts · 17 votes
    2y

    @Doug Smith understood thank you

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2y
    Quote from @Ryan Duphorn:

    $269,800 loan. Loan origination charges are $4,670 (origination fee) and $1055 (underwriting fee). My loan is a 5% down owner occupied conventional loan at 7.5% interest. At first glance, this seemed high to me but I'm not sure if it's because of the current mortgage market / industry as a whole. I'm already under contract with a less than 30 day closing timeline so time isn't quite on my side.

    I pulled up my closing costs from my last home purchase in Nov of 2021 and it was $1200 for a 3% down conventional owner occupied loan at 3.25% interest. Again, not sure if the market has shifted.


     Hey Ryan, 

    Your lender is charging you less than 2 points which is pretty low. Most lenders charge 2.25-2.5% on a loan amount that size. 

    If you are working with a broker, you can price the loan lender paid, so you don't pay any origination fees. However your interest rate may be higher if you do that. 

    Can you get a seller concession? Depending on the down payment you may be able to get 3-6% in sellers concessions to cover your closing fees. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    1Reply
  • Helen Lowery
    Real Estate Agent · Williamsburg, VA · Member since 2017 · 76 posts · 42 votes
    2y

    Hello Ryan,

    The market has shifted considerably since 2021 regarding interest rates.  Everyone was re-financing in 2021 when interest rates were down in the 3-4% range for conventional owner occupieds.  Now, 7.5% is pretty standard.  

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  • Frank Preciado
    Lender · Phoenix, AZ · Member since 2023 · 25 posts · 6 votes
    2y

    I would definitely shop this around with other lenders. The market has changed compared to 2021 because there is no longer a loose money policy. But 2 origination points does seem excessive. Most transactions I am seeing that include discount being paid range from .50-1.00 on the high end. Good luck!

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  • Richard Scott Parsons
    Lender · CA · Member since 2023 · 5 posts · 0 votes
    2y

    It could be high...what state are you in? Credit score? Happy to give you a quote...

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  • Nick BelskyBusiness Member
    Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes
    2y

    @Ryan Duphorn

    You've got a blended Broker Origination fee there.  I'd guess a UWM loan based on the lender Origination fee amount.  Essentially, they priced you at "Borrower Paid" comp, so then they can issue a lender credit to offset their broker fee.  1.7% is not bad.  Personally I charge more on Conventional loans as the UW is way more scrutinized compared to private lending.  Given the market, those terms are not horrible at all.

    Cheers!

    [email protected]
    Belsky Mortgage, LLC522 Reviews
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