My GF and I have gotten a commitment letter on a 30 yr FHA fixed rate loan for 400K.
I think the fees/points seem high.
Commitment Fee – 1.0 point = $3,949.00
Discount Points – 1.5 points = $6,041.97
Underwriting Fee = $575.00
We both have low fica scores. 590-630
This is not a solicitation for anyone to get us a mortgage, all we are looking for is mortgage professional to give us an opinion on the fees.
Thanks
I wouldn’t be looking to borrow almost $400,000 with those crappy FICO scores. You obviously can’t handle money and you shouldn’t be looking to borrow this much more.
If you improved your credit, the cost of this loan would come down a lot and it would be more affordable. You would save a ton of money in the long term.
good luck!
The committment fee is a bogus one. I could see an origination fee and in the absence of an origination fee this is probably an ok fee as it’s how the broker gets paid. The underwriting fee is mostly for the appraisal. If there isn’t a separate appraisal fee then this one is OK too. If these are above and beyond, then they aren’t reasonable.
The discount points are voluntary but I suspect they are to buy down your interest rate enough to make your payment ‘affordable’ which really means you are borrowing right up to your maximium. Again – it doesn’t look like this is a smart loan for you right now.
yep as there can be a max of 1 point discount and 1 Point origination. Now do not buy a home until you are wed I see these problems every day and you could be the next one to post one here. If you mve ahead then you MIP will be higher as per your scores
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Those numbers are good.
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Unfortunately you are experiencing the result of your bad credit. The discount points are what "pay down" your interest rate. The better your credit, the lower your interest rate. Basically you’re paying (.015 x mortgage amount) to offset what would be a high interest rate. This is almost certainly optional as all you are doing is paying more now to pay less over time. See what they would charge you if you DIDN’T pay down the interest rate. You could then put more money down on the property or just save it for expenses or to pay down debt.
As to the commitment fee, it’s a crap fee, but good luck getting around it. Underwriting is unavoidable, and variable. Without being able to see your whole Good Faith Estimate it’s really tough to see what other fees/costs you’re incurring.
Oh, and shop around! There are certainly many companies that would be interested in helping you out…
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I’m an ex-mortgage lender.
I wouldn’t be looking to borrow almost $400,000 with those crappy FICO scores. You obviously can’t handle money and you shouldn’t be looking to borrow this much more.
If you improved your credit, the cost of this loan would come down a lot and it would be more affordable. You would save a ton of money in the long term.
good luck!
The committment fee is a bogus one. I could see an origination fee and in the absence of an origination fee this is probably an ok fee as it’s how the broker gets paid. The underwriting fee is mostly for the appraisal. If there isn’t a separate appraisal fee then this one is OK too. If these are above and beyond, then they aren’t reasonable.
The discount points are voluntary but I suspect they are to buy down your interest rate enough to make your payment ‘affordable’ which really means you are borrowing right up to your maximium. Again – it doesn’t look like this is a smart loan for you right now.
References :