| A Homebuyers Service From CLHLLC |
COST of MORTGAGEScontinued
HOW PERSONS IN LENDING MAKE MONEYcontinued
Because the names of fees to actually get a loan are not uniform, but are a losely used list of 'charges', it is hard to compare lenders. Not only do different lenders call the same fees by different names, but some lenders charge a whole bunch of separate little fees and other lenders charge just a few very large fees.
Even the 'primary charge' that allows mortgage brokers to earn income does not have a standard name and may be quoted as points, mortgage broker fee, origination fee, and other names. But what ever they are called, most of these fees do go for real lender services and costs ssociated with originating a home loan. Different lenders have diffentent price levels, and the highest priced lender could be twice the price of the lowest priced lender. These fees will typically be one to two percent of the amount borrowed.
No Cost loan. Many lenders offer loans at no points. You will find the interest rate on these loans may be slightly higher than on a loan where you pay one point. Also you ought to ask if the lender is waiving other cost beyond the normal one point cost.I will bet not. More likeky you are dealing with a yield spread premium. Many of the persons providing the purchase money for your loan will fold the fees into the interest and then give a 'rebate' to your loan company. This allows your loan company to advertise a 'no cost' loan or perhaps a 'one fee' loan. Your loan company could also pay the money provider some money to lower the interest. This would be similar to discount points.
The companies claiming the lowest rates may have the highest fees. And the companies claiming the lowest fees, may have the highest rates. You may think about this. Pay closing costs up front instead of wrapping them into the mortgage. Otherwise you will pay interest on that few thousand dollars for the life of the loan. An exception might be if you intend to keep the loan for only a short time. On the opposite side, pay the higher rate rather than discount points, unless you intend to keep the loan for a very long time.
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