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Rates are down today. Today’s comparison mortgage rates with no lender fees are 3.875 % on a 30 year, 3.250% on a 15 year and 3.00% on a 10 year. (click here for details)
So today’s topic is going to clarify what the heck a lender fee is. Some of you are just a little confused about the term LENDER FEES. So let’s break it down.
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OK – Lender fees are only a portion of your overall costs to get your loan done. These costs will be charged to you by your lender. Makes sense right? Hence the name lender fees.
Let’s be more specific. The terms you will hear are that are all lender fees are: origination fees; discount fees; processing fees; underwriting fees; credit report fees; tax service fees; flood certification fees; and any other term that can be dreamt up, and I call those JUNK FEES.
I talk rates with NO LENDER FEES. That’s right. NONE, NADA, ZIP, ZILTCH!
The reason I do this it to make it easier for you to shop from lender to lender without giving a bunch of personal information. You can give each lender the same standard loan scenario of an owner occupied, single-family house with a $200,000 loan amount, 80% LTV with a 740 credit score with escrows.
Then all you have to say is, “I am looking for your best rate today with no lender fees.” It makes it very easy to compare multiple lenders by doing this.
Now, I want to make sure I point out that this will only give you a general idea who will have the best deal for you.
NOTHING, NOTHING will ever replace pricing your specific loan scenario from lender to lender. One little thing that you think is no big deal can change your rates and costs in a hurry. But most often than not if he or she has the best rate with no lender fees that lender will be your best bet.
Now I need to also point out that if I am talking NO lender fees that means the rate is slightly higher than the par or lowest possible rate that day.
By taking a slightly higher rate – usually an eighth of a point – you can’t get rid of those stupid lender fees and maybe cover some of the other fees as well.
Or you can actually take it one step further if you think you are not going to be in your next mortgage for very long and ask your lender for his or her best rate with NO FEES at all. This will be an even higher rate depending on your loan size, and you won’t have any closing costs. This can be a great option, depending on your situation.
And, of course, you can take it the other way and go for the lowest rate and fees or even buy down your rate with discount points. Buying down your rate in most cases doesn’t make any sense at all. If you are considering that option, contact me first. I will smack you upside the head, and talk some sense into you.
So, what costs are left to cover after your lender fees? Well, there are three areas left where you will still have costs.
You will have the appraisal fee, all title or attorney costs and your prepaid items such as your escrows and odd days interest. Now for the most part all of these costs are going to be very similar from lender to lender. But they do play a big role in your total closing costs on your loan. Title fees in some states can get a bit pricey.
Well – I hope this helped clear up the LENDER FEE mystery for you. When it comes down to it, the lender with the least amount of lender fees won’t have to increase the rate much at all to cover them. The lenders with high lender fees will have to increase it more in order to cover them all.
It can make it very transparent who is the better deal. Should I have just said that at the beginning? Probably. Oh well.
Hey, if you want to share some lenders with low lender fees, post them in the comments section below. I have seen some with total lender fees around 400-600. I think that is super cheap.
Let’s change the way people shop for a mortgage…forever!
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below. Daily comparison rates, calculators, and other cool features are available in the free Rates in Motion LoanApp by going to your smart phone and clicking on this link, activation code is 9203780002