Points charged on Mortgages <$100K in St. Louis?

7 Replies

Good Afternoon All!

I'm in my last steps to lock up financing (conventional) on my first investment property - final inspection was this morning and am discussing options with my lender.  

For those purchasing homes that are less than $100K, are you being charged points? I'm told that at 20% and 25% down, I will be charged 2.50pts and 1.25pts, respectively. They say on funding over $100K, there are no points charged.  Is this typical?

Thanks in advance,

Mike

@Mike B. that does sound like a lot of points but in reality lenders actually lose money on these loan sizes.  Many lenders won't even lend below $100k.  Some wont' lend below $75k.  You found one that will, and maybe those fees help them "stay in the green" on their balance sheets for those loan sizes.  I am assuming this is a normal, conforming Fannie Mae/Freddie Mac type of loan.  There are other lenders out there who have no loan minimums and that don't charge those fees.  Up to you if you want to switch but maybe try posting this in the Missouri forum too?  Just state you are looking for a conventional lender with no loan minimum and see if any local people can give guidance.  Hope this helps! 

@Andrew Postell yes, that's what the lender told me as well.  Anything above $100K would be no points - and yes, this is a conforming Fannie/Freddie loan. Thank you for your guidance - I am exploring some other options as well.

Thanks!

@Mike B. You may want to check out US bank. I’m on my second loan with them now (they go up to 5). Each loan has a 770 underwriting fee. After that it’s points depending. In January I had a 60k loan with 1 point and now I’m getting a 45k loan with .375 points.

It wouldn't hurt to price it out with another lender just to compare. My fiance is a lender here locally in St. Louis and would be happy to chat with you --> Christopher Beahm at Guild Mortgage.

Best of luck, and congrats on your first rental property!

Kristen PaquetteRealtor ® | Worth Clark Realty

Thanks for the help everyone - I talked to another lender. Got in to a 20% down with no points through another lender at the same rate as the other lender with no min requirement. Closing costs are a few hundred dollars more but saving roughly $1,100 by not paying points and keeping thousands in my pocket by not going up to 25% down.