LLPA? Points Requirements?

Question

I'm under contract on my first property (thanks BiggerPockets community). My lender just told me that 2nd home liens are required to pay points. I got the impression it was a Fannie thing, not an individual investor thing, but I haven't probed any deeper with him yet. Wanted to check with the folks here to get educated first. I read something about LLPAs on the forum that I don't understand. Any advice/education would be appreciated. He's saying 7.5% with 3pts or 8.125% with 2pts (30 year fixed) with no Zero or 1-point options. Won't kill the deal, but more out of pocket than I'd anticipated (and a little frustrated he hasn't mentioned this previously).

Michael Baum · Answer

Thanks @Russell Brazil. So many acronyms.. :)

Russell Brazil · Answer

LLPA = Loan Level Price Adjustment

Sarah Kensinger · Answer

Yes, points are a pain point for a new investor (pun intended ;D).

Seems like there isn't a way around them no matter what lender you talk to!

Andrew Postell · Answer

@Steve Ford fees like "points" are really "regulatory"...they are more "market conditioned" based.  It is true that some lenders might charge more or less than other lenders but because the market is a little different right now, just about all of these loans (especially at 10% down) will carry some type of points.  Pre-Shutdown, they did not.

Steve Ford · Answer

Thanks Andrew. Doing 10% down. Credit is 800+. I have reached out to a few other lenders to compare. So points is pretty normal, but is it a regulatory thing through Fannie?

Andrew Postell · Answer

@Steve Ford the points is usually based on your credit and your downpayment.  Are you doing a 25% down loan?  20% down loan?  15% down loan?  And yes, it is normal to pay SOMETHING in points these days...but your out of pocket is affected mostly by your downpayment and credit.  So, if you are paying 3 points with 25% down...that's a lot different than 3 points with 15% down.  Might be worth the time to shop around some.

Steve Ford · Answer

2nd mortgage for a 2nd home. And no idea if LLPA is applicable. Just something I found with a google search that I thought might be the basis of my lender saying these kinds of loans require points.

Michael Baum · Answer

Ok, so to be clear @Steve Ford, you are looking to get a 2nd mortgage on a 2nd home you currently own?

Or do you mean buying a 2nd home?

LLPA  - Limited Liability Partnership Agreement? What does that have to do with your current situation?

LLPA? Points Requirements?

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