Broker is charging .05 point to lock rate - Posted by Tim (CT)

Posted by Gary (CT) on October 16, 2003 at 08:10:08:

Another thought on this. I am not sure what your goals are. Choosing a 15 Yr will increase equity faster, but with a 15 Yr you are going to pay more points and fees. If your purpose is to increase equity faster, perhaps a better way to go would be to get a 30 Yr and then then pay a little of the principle each month. If your purpose is to get a lower rate, it might be better to ask if the bank will give you a 3 Yr or 5 Yr adjustable. Then again, you may face a prepayment penalty or the same fees/points. Whacha gonna do? Gary

Broker is charging .05 point to lock rate - Posted by Tim (CT)

Posted by Tim (CT) on October 15, 2003 at 07:57:56:

REPOST from the Financing board. Just looking for opinions over here as well.

This seems a little odd to me. The broker I’m dealing with on a refi is trying to charge me a 1/2 a point to lock in the rate. That comes out to $570! Now, I can understand maybe charging a small fee to do this (i.e. $50 or $75). But, $570 is outrageous. I’m going to call him to talk about it but I wanted to get the opinion of others on this board. Does this seem high? Normal? Gouging?!?!

Thanks in advance.

Re: Broker is charging .05 point to lock rate - Posted by Randy (SD)

Posted by Randy (SD) on October 15, 2003 at 11:31:15:

Not at all unusual or outrageous. In fact it?s commonplace. If the lock results in a ½ % interest savings over the term of a 30 year mortgage that?s $3,800. I know you will probably never go the term of the loan before selling or refinancing but that?s how and why they (the lender NOT the broker) charges it. The broker has no option unless s/he pay?s it.

Re: Broker is charging .05 point to lock rate - Posted by eric-fl

Posted by eric-fl on October 15, 2003 at 09:11:53:

Assuming this is a “normal” refi, (whatever that means:), this is absurd. Just tell them, “No”. If they won’t deal on it, I’d move on. I’ve NEVER had this done to me. Not that I’m the Refi King or anything, but I’ve done more than a couple. This is bogus, and a gouge. Tell them to remove it, or move on.

I’m actually a little surprised by this, considering how cutthroat competition is in the mortgage industry right now.

Re: Broker is charging .05 point to lock rate - Posted by Tim (CT)

Posted by Tim (CT) on October 15, 2003 at 11:43:36:

So, this is their way of getting a pre-payment penalty out of me without charging a pre-payment penalty? They’re just doing it upfront?

Also, this guy works for the lender. I said Broker but he’s actually an employee (Webster bank here in CT).

What if I don’t want to lock the rate and I just take what the rate is at the time of close? I’m doing a 15 yr fixed and he’s giving me a rate of 5.125 on a FICO score of 680. The property is a non-owner occupied 3-family investment property.

Thanks again.

Re: Broker is charging .05 point to lock rate - Posted by Gary (CT)

Posted by Gary (CT) on October 15, 2003 at 14:47:27:

Sounds pretty typical, sorry to say, especially on a rental property–but you seem to have a really good rate on a non-owner occupied. I would also anticipate a lot of “junk” fees, so you may want to inquire. Gary

Re: Broker is charging .05 point to lock rate - Posted by Tim (CT)

Posted by Tim (CT) on October 15, 2003 at 14:51:46:

Ya, I thought the rate of 5.125 was a little odd (i.e.too good) as well. I questioned him multiple times and he said it was correct. He is charging me 1.5 points for this rate which is probably what’s making up the difference. He’s also charging me another half a point for a cash out. And, then another half a point for locking the rate. That’s a total of 2.5 points. That sounds like alot to me.

Re: Broker is charging .05 point to lock rate - Posted by phil fernandez

Posted by phil fernandez on October 15, 2003 at 18:24:56:

Hi Tim,

By the time you tack on the 2.5 points your real interest rate will end up around 6 - 6.5% interest. Just another way for the mortgagees to sqweeze higher rates out of you.

I’d shop this offer and let the mortgage broker know that you will be shopping the offer.