Posted by Matthew on July 31, 2007 at 10:52:25:
That depends on the service you received. Consult with the broker and ask for a lower fee or take your loan elsewhere. this is America not mother Russia!!
Is this ‘Broker Fee’ too much? - Posted by Sharif
Posted by Sharif on July 31, 2007 at 10:00:24:
2.75% on a $260k loan ($7150)? Total closing cost (incl. title insurance) = $10,548
Seems rather expensive. Your thoughts?
Re: Is this ‘Broker Fee’ too much? - Posted by Walt
Posted by Walt on August 01, 2007 at 14:16:14:
Everybody complains about the Mortgage Broker getting his points, yet they don’t blink an eye at the 6% Real Estate Commission. The fact is that the Mortgage Broker does 3 times the work for his money than the Real Estate Broker. Let him make his living too.
Re: Is this ‘Broker Fee’ too much? - Posted by Ben Carmona
Posted by Ben Carmona on July 31, 2007 at 17:27:47:
Is the 2.75% just the broker origination?
How much in lender discount? (this is used to buy down your rate).
If it’s just the broker origination then I’d say yes, $7,150 is too much compensation in my opinion; that’s regardelss of what the rate would be. You see, even if the broker is giving you the “par” rate from the lender (meaning that the broker is not being paid anything from the lender for the rate)…he’s still making too much.
For my clients, I do loans at $2,500 for each deal. Clients can pay this either through origination and/or by taking a slightly higher rate over the “par” rate. This way the lender pays for part of my compensation. Having the lenders par rate and paying compensation all in the form of origination works best for properties you plan to hold long term. For short term holds, it may make more sense to keep your upfront costs lower by taking higher rates.
Does your mortgage consultant not explain this to you? Investors need to know this so they can structure their loan based upon the goal they have for that property.
One thing I’ve found, is that only charging $2,500 works great for larger loans but not so well for smaller $40,000-$70,000 loans. Sometimes clients feel that their costs should be inline with what the loan amount is rather than what I feel my services are worth. After doing 5 loans for a client my compensation goes down to $1,800 for life.
Ben Carmona
Re: Is this ‘Broker Fee’ too much? - Posted by rob ricker
Posted by rob ricker on July 31, 2007 at 12:26:40:
It depends on the entire loan package …could be cheap if you’re getting a below market rate. From my experience as a broker, you can expect higher fees (add 2-3%) OR rate (add .5-2%) on an investment property. It’s your choice which way you pay, but you have to take a bump somewhere …or the broker has to lose money on it either one.
For example: I just closed a personal loan and paid 5 points to get a 6.5% 30 yr fixed, interest only for the first 15 yrs. I’m a broker, yet I gladly paid the 5 points. 2% went to the brokerage …the other 3% went to the lender to buy the rate down. I didn’t get ripped off …I got the deal I wanted. I could have knocked 3 points off the deal, but I would have paid about 8%.