Are these Extremely High Origination Costs?

Question

Hello All.

I am refinancing a 3 unit investment home with Fannie Mae Guidelines. 70% LTV cash out. Lender is a small brick and mortar bank in the North East.

My lenders origination costs are 2.5% not including discount points.

This equates to over 10k in origination costs alone. Is this typical for this loan type?

Jared Rine · Answer

@Justin R...seems chunky to me.  If it was just the discount points, then yea, maybe.  I'm a mortgage broker out here in Ca, and rough pricing on this scenario, 700 fico, would include 2 discount points, which account for origination already.  Origination + discount seems like a lot.

Yannes Chiang · Answer

@Justin R. My own experience 2.5% is quite high. Normally it should be between 0.5-1%. But your loan size matters. I would recommend you talk to other lenders as well, find a good loan officer who may help you shop loans.

Justin R. · Answer

@Yannes Chiang I'll give them a call. Big banks are a pain in the a*# when it comes to underwriting though.

You are correct that it is still a residential loan, but because it is a multi family, it has to conform to Fannie Mae standards which are sometimes more stringent than SFDs and owner occupied.

Yannes Chiang · Answer

@Justin R. 3 unit should still be considered as residential loans. Have you tried the big banks? They are not necessary pricier. I have a couple loans with Bank of America and they provide better rates and cheaper cost to me, also great customer service.

Justin R. · Answer

@Yannes Chiang Thanks. I always shop out at least 3 lenders, This is my preferred lender in the area. I try to use lenders Ive utilized in the past for simplicity, and relationship.

My past loans have been in the same range your mentioning; but perhaps this exact loan (Amount, LTV, Multifamily, OOS, Investment, Cash out) triggers an industry standard higher origination costs???

Justin R. · Answer

Literally origination only.

750 Fico

2.5 origination

.56 discount points to buy down to 5.99%

Aggregate $12,900 for origination and a .56 pt buy down on a 420k cash out refinance.

Are these Extremely High Origination Costs?

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