Loan Origination Fee

**citypicture** · 09-15-2009, 07:06 PM

I am currently buying a home and am not quite sure how "buying down the rate" works and am wondering if my lender is trying to pull a fast one on me.

I am being charged a $3,809.20 origination fee to buy down the rate from 4.5% to 4.375% on a 5/1 ARM $387,586.00 loan amount.

Is that correct? Can anyone explain how this works?

**marryroy** · 09-16-2009, 05:57 AM

Hello...
I read your post.So you have trouble with your interest of the loan.Well i just want to tell you that you first contact the firm or bank from which you have taken it.The calculation may be wrong from theri side.Thank you for the comment...

**cfgoulart** · 09-16-2009, 10:39 AM

You should be able to ask for the lock confirmation, which will show the cost to your broker. Loans are priced on a sliding scale. It is different every day, and from lender to lender. An example may be, 4.5% rate at "par" (costs nothing, pays the broker nothing), 4.75% will pay the broker a half point, 4.25% will cost a half point.

You can also ask the broker if he is getting any "rebate" from the bank. If he is getting nothing from the bank, then the costs should be fine.

**cfgoulart** · 09-16-2009, 10:42 AM

One more thing, you might ask your broker how much he is making on your loan. 1-2 points is pretty typcial. If you know how much he is going to charge, and you guys agree to that number, then you should be able to have honest communication about where the rates are, and what the cost is going to be for you to buy down the rate, etc.

Also, you should be aware, these rates change every day, sometimes more than once a day. Usually they don't change a lot, but over the course of a week, your cost for the same rate could fluctuate anywhere from .0125% to .5% (or more in volitile markets).