Mortgage Broker Training Courses – Diploma – Cert IV, mortgage broker fees.#Mortgage #broker #fees


Mortgage Broker Training – Become an MFAA accredited Mortgage Broker

  • Mortgage broker fees
  • Mortgage broker fees
  • Mortgage broker fees

Mortgage broker fees

Mortgage and Finance Broker Training Courses

Specifically designed to get you started and help you advance within the Mortgage and Finance Industry.

Mortgage broker fees Mortgage broker fees

Mortgage broker fees Mortgage broker fees

How do you become a mortgage or finance broker? Start or expand your career in the finance and mortgage industry or simply improve your skills as a broker?

Mortgage Broker Training provides courses to get you started as an Australian finance or mortgage broker . The main industry requirement to become a mortgage broker or credit adviser is a FNS40815 Certificate IV in Finance and Mortgage Broking. Even experienced brokers are now required to have the Certificate IV in Finance and Mortgage Broking under ASIC requirements for licencing, MFAA guidelines , FBAA guidelines and to become accredited with lenders.

The Certificate IV in Finance and Mortgage Broking enables you to become accredited with lenders and the industry associations – the Mortgage and Finance Association of Australia, MFAA and the Finance Brokers Association of Australia – FBAA. The Certificate IV will also meet the educational standard of the National Consumer Credit Protection Act – NCCP (Federal licencing requirements).

The MFAA also require current members to hold a Diploma in Financial Services (Mortgage Management) and new entrants to either currently hold the Diploma or be enrolled to complete the Diploma.

The courses offered are all nationally recognised within the Australian Mortgage Finance Industry by Broker Groups, Industry Associations and Australian Lending Institutions.

This is the starting point for your career as an Accredited Mortgage Broker or Credit Advisor.

If you are wanting to enter the industry, some Broker Groups and franchises will offer training courses, however you need to commit to them prior to the training, often paying large franchise fees before you can join or really understand the industry. Learning about the industry and achieving industry and government recognised qualifications gives you the knowledge prior to committing to a group or paying franchise fees. By completing one of these courses you obtain the educational requirements and knowledge of the mortgage industry first. Then with an understanding of the industry you can choose where you want to start in the mortgage industry. – Whether with a franchise, a mortgage group or independently.

So how do you become a mortgage broker?

The industry associations requirements to become a broker include completion of a Certificate IV in Finance and Mortgage Broking – (FNS40815) and under MFAA requirements, from the 31st of January 2013, all current members will require the Diploma to stay compliant with guidelines – New members require the certificate IV and to obtain the diploma within a year of joining. The National Consumer Credit Protection Act RG206 implemented during 2010 also has the Certificate IV as a key educational requirement.

On completion of this course, not only will you gain the required educational standard but gain meaningful hands on experience. All our trainers have had years of real experience in the mortgage industry. You also have the ability to apply to the MFAA as an Accredited Mortgage Broker (AMC) or FBAA provided you meet their other requirements.

Courses are available face to face monthly in Sydney, Melbourne and Brisbane, and other capitals and regional centres or by distance learning or electronic media. (See course Schedule for details)

On completion of the course we can even put you in touch with groups to get you started.

This course could also be the starting point of a range of career opportunities and jobs including:


Mortgage Brokers, Find Broker Details – Contact Info, mortgage broker fees.#Mortgage #broker #fees


Compare Mortgage Brokers

Mortgage broker fees

Finding the perfect house may be difficult, but choosing the right mortgage loan can prove to be even more challenging, especially for first-time borrowers. While the mortgage process may seem daunting, finding a knowledgeable and reliable mortgage broker can conveniently simplify and expedite the process. A mortgage broker will help you navigate the mortgage system and will match your financial needs with a suitable mortgage from a selection of lenders. The key is choosing the right broker. You will need to have a basic understanding of the mortgage transaction process in order to compare various brokers across multiple criteria. It is also important to note that this comparison only includes mortgage brokers who are registered to originate loans in California.

People often confuse mortgage brokers with lenders. Essentially, a mortgage broker is a loan provider who serves as a liaison between you and mortgage lenders. A mortgage broker offers the loan products of various lenders, while a mortgage lender provides the actual loan money. Mortgage brokers do not loan money; instead, they work with you to help you find appropriately-matched mortgage loans. Typically, a mortgage broker will learn about your particular financial situation and then shop around for the best loan deal from lenders offering the particular type of loan you need. Brokers usually work with numerous lenders, attempting to match the right lender with your profile. Since they have so many lenders from which to choose, brokers are more likely to find loans for borrowers with special needs, such as bad credit, than individual lenders.

Mortgage brokers will accept your application and seek to lock in rates and terms with lenders. They also provide required state and federal disclosures. Additionally, brokers will gather all the necessary documents, including credit reports, employment verification statements, asset disclosures, and property appraisals. Once an application file is deemed complete, the mortgage broker submits it to the appropriate lender, who then handles loan approval and disbursement. A broker earns commission in exchange for bringing borrowers and lenders together. You usually pay the broker’s commission indirectly, in the form of closing costs or additional loan points. The mortgage broker will receive payment when the loan is closed.

While the process of obtaining a mortgage loan is complex, the basics of the transaction can be understood by even the most inexperienced borrower. And having a basic understanding of the mortgage process will prove to be beneficial when you meet with a prospective mortgage broker – it will go a long way as you discuss and compare your loan options with him or her. Here are the fundamental concepts of obtaining a mortgage loan that you should compare:

  • Loan Term : All mortgage loans have a term of repayment, which is the number of years that your payments will last. Your mortgage term can have a significant impact on your interest rates and monthly mortgage payments, making it a critical element to take into consideration. The most common options are the 15-year and 30-year mortgage terms; however, some loans may have terms for 10, 20, and even 50 years. The choice between a short- or long-term mortgage involves a simple trade off. Basically, the longer you borrow the money for, the more interest you’ll pay. The other side of this is that the longer you take to pay back the loan, the less you have to pay each month. You will have to determine which loan term is best according to your particular financial needs.
  • Interest Rate : The interest rate is the amount it will cost you to borrow the money, making it one of the most important factors in your mortgage. Interest is denoted as a percentage of the loan amount. You can choose to have a fixed-rate or adjustable-rate mortgage loan. With a fixed-rate mortgage, you won’t have to worry about the interest rate changing throughout the life of the loan, which means your monthly mortgage payment will never rise. While this offers some relief, you can end up paying a bit of a price for it, depending on the current mortgage rates. An adjustable-rate mortgage, on the other hand, carries more of a risk because your monthly mortgage payment will change according to market fluctuations. Yet this type of mortgage is very attractive to borrowers because the initial payments are significantly lower than those of a conventional fixed-rate mortgage.
  • Fees and Points : Aside from the interest rate, you also have to be aware of all the fees that may be incurred as a result of obtaining a mortgage. This can include a wide array of charges, ranging from loan application fees and origination fees to credit check fees and appraisal fees. It is also important to know the number of points, or discount points, on your loan. A point is a form of pre-paid interest that reduces your overall interest rate and therefore your monthly mortgage payment. One point is equal to 1% of the loan amount, so one point on a $150,000 loan would be $1,500, and two points on a $300,000 loan would be $6,000. Essentially, the more points you pay upfront, the lower your rate of interest and vice versa.

Now that you have a better understanding of the basic mortgage transactions, you are more prepared to compare mortgage brokers and ultimately find the best one for you. Here are the most important criteria to consider as you weigh your options:

  • Loan Type : You should first determine which loan type is best for your financial needs. Not all brokers handle all types of loans, so it is important to narrow your options to just those brokers that specialize in your preferred mortgage loan. There are various types of mortgage loans, but the two most popular options are fixed-rate mortgages (FRMs) and adjustable-rate mortgages (ARMs). In a FRM, the interest rate and your monthly mortgage payment will remain the same throughout the entire life of the loan. The term is typically for 10, 15, 20, or 30 years. The biggest advantage of having a fixed-rate mortgage is knowing that your interest rate and monthly payments will never increase. You can also budget more easily because the monthly payments remain the same throughout the entire length of the loan. However, the interest rates of fixed-rate mortgages are higher than the interest rates on other types of loans, so the monthly payments are usually higher. With an ARM, the interest rate and monthly mortgage payment will only remain the same for a set period of time, after which they will adjust based on an index. This type of loan is therefore considered to be riskier because the payment can change significantly. But in exchange for the risk associated with an ARM, you can be rewarded with an interest rate lower than that of a 30-year fixed-rate mortgage.
  • Mortgage Loan Programs : Mortgage brokers often work with banks, since they are the most traditional lenders and typically offer the largest loans and best interest rates. But you’ll need a great credit score if you want the broker to secure a mortgage from a bank. If your credit has seen better days, then you may want to talk with the broker about other options. A number of federal, state, and local agencies offer programs to help those in need of assistance, which can include loans, down payment assistance, or subsidized building costs. Taking advantage of these programs can drastically reduce the cost of owning property, so carefully examine each type to see if one is suitable for you. Just be aware that applicants must meet a strict set of guidelines in order to qualify for these special loan programs.
  • Broker Reputation : It is also imperative to review each broker’s background and credentials. You will want a broker who has been in the mortgage business for several years and who works for a reputable company. See if his or her company has a high rating from the Better Business Bureau (BBB) or any awards from influential business leaders like J.D. Power and Associates. It is even beneficial to see the monetary settlement and complaint ratings awarded by the Consumer Financial Protection Bureau (CFPB). Little complaints, multiple awards, and favorable BBB ratings show that the company has high standards for its business practices as well as its employees.

A mortgage is a long-term commitment and a big responsibility, so it is imperative to find a broker who has your best interests in mind and who can provide you with the best solution. Once you find the right broker, you can be assured that your concerns will be handled properly and that you will get the attention and service you require. Never settle for anything less.

Read the sections below for more information on how to choose a California-registered mortgage broker, or head back to the search results page to start comparing your options now.


How Does a Mortgage Broker Get Paid, The Truth About, mortgage broker fees.#Mortgage #broker #fees


How Does a Mortgage Broker Get Paid?

Mortgage broker fees

Mortgage Q A: “How does a mortgage broker get paid?”

If you happen to use a mortgage broker to obtain your mortgage, you may be wondering how they get paid.

Mortgage brokers essentially work as middlemen between borrowers and banks/lenders, so they can be paid by either parties.

In the past, mortgage brokers got paid via yield spread premium (YSP), which was the commission the bank or mortgage lender provided in exchange for a given mortgage rate above market.

Mortgage Brokers Were Paid More for a Higher Rate

For simplicity sake, the higher the rate, the more YSP the broker would receive.

YSP was also referred to as “par-plus pricing”, “rate participation fee”, “service release fee”, and many other variations.

Mortgage brokers had the ability to make several points on the back-end of a loan, earning thousands of dollars, sometimes without the borrower’s knowledge.

They could also collect money on the front-end of a loan via out-of-pocket closing costs like loan origination fees and processing costs.

For example, a broker was able to charge one mortgage point upfront for origination, meaning one percent of the loan amount, while also tacking on loan processing fees.

The smaller the loan amount, the more points you d likely be charged, as a point wouldn t be as meaningful.

Trickier Mortgages Tend to Cost More

Generally, the more complicated or tricky your loan is, the higher the broker costs will be, as it takes more time and energy to close.

So if your loan isn’t plain vanilla, and requires a lot of tinkering and paperwork/legwork to make it work, you’ll likely be charged more, or offered less attractive pricing.

If the loan can be closed with any given bank or broker, you’ll probably be able to shop around to get a better deal.

Of course, there are always exceptions to the rule, and borrowers have certainly paid through the nose for perfectly simple loans.

Make sure you’re clear on what exactly is being charged by the broker for their role in the loan process or you may get a nasty surprise.

Retail loan officers (those that work directly for one specific bank) also get paid in a similar fashion and could potentially overcharge you, but their commissions don’t need to be disclosed like YSP, so you’ll never know how much they made on your loan.

This has led to an ongoing debate about the fairness of wholesale vs. retail lending, although it can actually be advantageous for a borrower to use a broker, as all fees must be disclosed.

In summary, mortgage brokers can make money from:

Loan origination fees

Yield spread premium (this practice is now banned)

Other possible admin/junk fees

If you re unsure about which route to go, check out my article on mortgage brokers vs. banks.

How It Works Today

As of April 1, 2011, the yield spread premiums described above were effectively banned. Today, mortgage brokers can only get paid by either the borrower or the lender, not both.

In other words, they charge you directly to close the loan or they get paid by the lender and you pay for that commission indirectly ( not out-of-pocket at closing) via a higher interest rate.

It s similar to YSP, but brokers must choose a compensation plan upfront with all the lenders they work with, as opposed to charging different amounts on each loan as they see fit.

For example, they may choose to earn 1% on every loan they close with Bank A. So if the loan amount is $500,000, they d earn $5,000. If it s $300,000, they only get $3,000. And so on.

But they may select a higher compensation structure with Bank B that gives them 2% on each closed loan. This essentially allows them to send their loans to higher-paying banks depending on their ability to sell the customer on a potentially higher rate.

So you can still get a raw deal. Perhaps more importantly, it means they can no longer get paid on both the front- and back-end of the loan.

However, you should continue to be vigilant and look over your loan documents to ensure you aren t being overcharged.

Put simply, you ll want them to send your loan to the bank that offers you the lowest interest rate, not the one that gives them the highest commission.


Mortgage broker fees explained: Commission and costs to watch out for – Mirror Online #can


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Mortgage broker fees explained: Commission and costs to watch out for

There s no such thing as a free mortgage

A qualified mortgage adviser – also known as a mortgage broker – can help you find a mortgage with low rates that suits your finances and guide you through the paperwork.

And at a time when lenders are tightening their rules, a good mortgage adviser can also help you jump through the hoops. In some cases they will find mortgages for you that you cannot apply for directly.

But however good your mortgage adviser, they are not doing it for free. They may help you save money in the longer term, but it’s important you know what you’re paying them.

You can search for mortgage advisers on the directory Unbiased. We’ve also got tips on comparing them here.

How is a mortgage broker paid?

On average, you pay 500 for a broker to arrange your mortgage. But different firms charge in different ways:

  • Fixed fee. Your adviser will agree to arrange your mortgage for a fixed amount of money. This should be agreed in writing so there isn’t any room for dispute.
  • Hourly rate. Some advisers will charge per hour. Make sure the adviser gives you an estimate of how long the work will take.
  • Commission. If a mortgage adviser is ‘fee free’, they may be receiving payment in the form of commission from the lender. Make sure you ask about it right at the start so you can’t be misled.
  • Percentage. Some advisers will charge you a percentage of your mortgage. For example, if you agree a 1% charge for a 300,000 mortgage, the fee will be 3,000. Some advisers will cap fees to a certain percentage.
  • A combination. Some advisers will charge fees but still receive commission. Others will charge fees, but agree to cap them at a percentage of the mortgage.

You should be able to find information about payment from the mortgage broker’s terms and conditions. You should also receive a document at the start explaining the key facts and costs.

Other fees

When taking out a mortgage, you will also have to pay fees to the lender. These vary, but may include arrangement, booking and valuation fees. The Money Advice Service has a helpful guide on the full range here .

Do I have to pay all these mortgage fees upfront?

You’ll have more money to spend in the longer term if you pay the fees upfront

You may be able to add some of these fees to the mortgage. This can save you paying all at once – but it has a major downside. You will then be paying interest on the fees AND your original debt.

You can cut down on fees by taking out a longer term mortgage, such as a five or ten-year fix. You can read more about the pros and cons of fixing here .


Closing Costs Explained – Escrow – Discount Points – Lender Fees #mortgage #refinance #rates


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Understanding Closing Costs

In this article, LendingTree will explain the cost of a mortgage, including closing costs. We ll help you understand how to differentiate PMI from PITI, understand origination and discount points, and learn about escrow.

Which costs to focus on for the biggest savings

Many home buyers focus on just one cost, when really, there are a wide range of mortgage costs to consider when shopping for a home loan. Typically, buyers focus on getting the best mortgage rates when comparing quotes from lenders. And that s smart. ​

Using a mortgage payment calculator and some basic math, you can see that someone taking out a loan for $180,000, with a 3.5% APR loan on a $200K home is likely to pay just over $110,000 in interest over the lifetime of a 30-year fixed-rate mortgage. Anything that can be shaved off that cost is going to be welcome.

However, just because interest is by far the biggest of the various mortgage costs, that doesn t mean you should ignore the others. Closing costs vary widely between mortgage lenders and loan programs. Typically they run from two to four percent of the home s purchase price. In the example above, that would be $4,000 to $10,000.

Consumers who compare quotes from several lenders may be able to place themselves at the lower end of that range. There s absolutely no reason for a buyer not to contact competing lenders and choose the loan with the lowest overall costs.

What s Tax Deductible?

There s a widespread belief that all closing costs are deductible when filing federal taxes. That s untrue for most, but there are exceptions — and they can be big ones.

The IRS says the following may be deducted by those who itemize their deductions:

  1. Any property taxes paid by the buyer at closing, although there are special rules for cooperatives.
  2. Prepaid mortgage insurance premiums (MIPs).
  3. Mortgage origination fee. That s is usually expressed as a percentage of the home loan amount, for example one point.
  4. Discount points used to buy down a mortgage rate. These are paid to obtain a lower interest rate, not to originate the loan. These have to be pro-rated and deducted during the life of the mortgage. If you paid $3,000 in discount points to reduce the rate of a 30-year home loan, you d be able to deduct 1/30 th of the points, or $100 per year. If you refinance your mortgage. you ll be allowed to deduct any discount points that have not yet been deducted.
  5. Mortgage interest paid during the year.

To deduct any of these costs, you have to itemize your deductions on a Schedule A. If you take the standard deduction, you cannot deduct closing costs or interest expense.

Closing and Mortgage Costs

Most closing costs are related to the mortgage or are associated with home ownership.

  1. Appraisal fee. Paid to the professional who assesses the value of the property.
  2. Attorney or title company fees. This is for escrow services when you sign the documents and complete a property purchase.
  3. Credit report fee. Covers the costs of checking your credit rating.
  4. Discount points. These are paid to get a lower mortgage rate.
  5. Impounds. These are pre-paid property taxes and homeowners insurance. They are not a lender fee but are simply costs related to owning a home, If you borrow more than 80 percent of the purchase price, most lenders require impounds. They prorate these amounts and add them to the monthly mortgage payment. Then the lender pays your insurance premiums and taxes as they come due.
  6. Inspection fees. It s recommended that buyers have a professional inspection to make sure the home is safe and livable.
  7. Loan origination fee. Charged by the lender for processing the mortgage application. It s usually defines as a percentage of the loan amount (in this case it s an origination point and not a discount point ) but it may also be a flat fee.
  8. Pest inspection fee. This determines if the property has termites or any other infestation.
  9. Recording fee. Charged by the city or county for recording the ownership change for the property and the lender s lien against it.
  10. Title insurance fee. There are two policies the buyer s and the lender s. The first one protects the buyer in the event that the title is not clear. The second protects the lender s interest. If you finance a home purchase, the lender will almost certainly require that you purchase a lender s policy.
  11. Title search fees. A search is intended to uncover any encumbrances on the title, such as unpaid mortgages or tax liens.
  12. Underwriting, processing, document preparation, courier fee, and more. These lender fees may be charged by the lender as separate items but are commonly wrapped into the origination. In the industry, these are called junk fees and they are absolutely negotiable.

Good Faith Estimates

Good faith estimates (GFEs) protect buyers by disclosing home loan costs when they apply for a mortgage. Lenders must provide a GFE, which lays out the basic terms and expected costs of the loan, within three working days of receiving a mortgage application. Many are willing to provide one before you actually apply, which makes shopping for your mortgage easier.

Other lenders do not issue GFE s to loan shoppers. Instead, they provide a worksheet or scenario. There is nothing wrong with this, but you should be aware that only an actual GFE provides certain protections.

Lenders must issue a new GFEs any time there is a material change in your application (for example, you applied for a 30-year fixed loan but then switched to a 5/1 ARM ). Your actual closing costs must essentially match the final GFE.

Closing costs are divided into three categories those which cannot vary from what was disclosed at all (most lender fees fall in this one), those that can come in higher but within certain limits (most of these are services from lender-selected providers), and those that can change by any amount (those are mostly costs from providers chosen by the borrower). We explain more about this in our article: the mortgage closing process explained .

Additional Resources

Here are some additional resources to help you better understand the mortgage costs and closing costs.


Mortgage Broker Fees #bad #credit #mortgages


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Mortgage Broker Fees

A client called us this week upset that his broker charged him a $5000 broker fee. So we asked where the broker got him approved. Much to our amazement, it was at a major A -lender. More surprisingly, the client s credit was excellent.

To us, this is almost criminal. There was no reason in the world this client should have paid this broker that kind of fee. The lender was already paying the broker a finder s fee. He didn t need to gouge the client for more.

This type of thing drives us batty. Our industry works hard to educate people about the benefits and integrity of professional mortgage planners. Every profession doctors, police officers, even priests have bad apples, but this behaviour hits close to home.

You might wonder why we re bringing this up in front of thousands of readers. The goal here is to warn consumers (and other planners) about what we consider rogue brokers. This is far from typical practice in our industry and people need to know that.

When is a broker fee warranted? Here are sample cases where such fees may apply (this list is not exhaustive):

  • Commercial Mortgages: Unlike residential lenders, commercial lenders often don t pay finder s fees. So there is no other way to compensate planners for the value they add in arranging hard-to-place commercial financing. Moreover, commercial deals take a huge amount of time and often never close for various reasons. In many cases, a planner can do 10 residential mortgages (and be compensated for them) in the time it takes to do one commercial deal.
  • Private Mortgages: When normal lenders won t approve a client, private ( hard money ) lenders are often the last hope. Like commercial lenders, private lenders don t usually pay finders fees. In these cases, broker fees compensate the planner for his/her time and for use of their private lending network. (Building a good network of private lenders is very difficult. We ll do a story on that sometime.)
  • Small Loans: A small deal (e.g. a $30,000 second mortgage) takes up just as much time and often more than a large deal. Really small mortgages also divert the planner s attention from other clients who deserve equal service. Because the finder s fee on these deals is tiny, planners sometimes charge a small and reasonable broker fee.

Remember, in Ontario a broker is not allowed to ask for any fees up front on residential mortgages under $200,000. For mortgages over $200,000, borrowers should get it in writing that any advance fees will be refunded if suitable financing is not provided.

In BC, it s illegal for a broker to ask for fees up front on a residential mortgage.

Generally speaking, advance broker fees on most residential mortgages should be a big red flag. (Click here for a related story). We know of no reputable mortgage planners that charge them, except in the aforementioned circumstances.

Even if it s a subprime (bad credit) client, lenders pay brokers well enough that extra fees shouldn t come up apart from the cases above.

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Best Mortgage Rates in the Nation with no Lender Fees #boa #mortgage


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Find Out What Our Clients Really Think!

We attend most of our closings and many of our happy clients have given us iPhone video testimonials. Check out their videos to see what they have to say about their RP Funding experience.

Direct Mortgage Lender – Not a Bank and Not a Broker

  • The big banks are so backed up with refinances, many raised their rates to slow down volume.
  • To a big bank you are just a number, and will most likely work with an out of state call center.
  • Mortgage broker fees raise the cost of your refinance, as a Direct Lender you pay no Broker Fees.
  • We have the authority to underwrite and close your loan, and we do it in as little as 10 days right here in Orlando, Florida.
  • Mortgage Rates in Florida will not stay this low for long, and with our fast process you can get in before it s too late.

No Games, No Pushy Sales People and BBB A-Rated

Most mortgage loan officers are paid commission and make extra money by selling you a higher interest rate, not here. We don t have pushy commission sales people, you will work directly with a Salaried Credit Manager who s only concern is earning your business, not making their next big commission check. This helps us keep our rates and fees low.

Based Locally in the Central FL area

Our office is just off of Interstate 4, Exit 90B in Maitland, Florida, just outside of Orlando. We would love to meet you in person, although you are welcome to complete the entire process over the phone, it s completely up to you. We help home buyers and home owners all over Florida.

1,000 Best Florida Mortgage Rates Guarantee

If you find a better loan somewhere else (which we doubt you can) and we can t beat it, we will give you a 1,000 Visa Gift Card.**


Closing Costs Explained – Escrow – Discount Points – Lender Fees #loan #calculator


#mortgage costs

#

Understanding Closing Costs

In this article, LendingTree will explain the cost of a mortgage, including closing costs. We ll help you understand how to differentiate PMI from PITI, understand origination and discount points, and learn about escrow.

Which costs to focus on for the biggest savings

Many home buyers focus on just one cost, when really, there are a wide range of mortgage costs to consider when shopping for a home loan. Typically, buyers focus on getting the best mortgage rates when comparing quotes from lenders. And that s smart. ​

Using a mortgage payment calculator and some basic math, you can see that someone taking out a loan for $180,000, with a 3.5% APR loan on a $200K home is likely to pay just over $110,000 in interest over the lifetime of a 30-year fixed-rate mortgage. Anything that can be shaved off that cost is going to be welcome.

However, just because interest is by far the biggest of the various mortgage costs, that doesn t mean you should ignore the others. Closing costs vary widely between mortgage lenders and loan programs. Typically they run from two to four percent of the home s purchase price. In the example above, that would be $4,000 to $10,000.

Consumers who compare quotes from several lenders may be able to place themselves at the lower end of that range. There s absolutely no reason for a buyer not to contact competing lenders and choose the loan with the lowest overall costs.

What s Tax Deductible?

There s a widespread belief that all closing costs are deductible when filing federal taxes. That s untrue for most, but there are exceptions — and they can be big ones.

The IRS says the following may be deducted by those who itemize their deductions:

  1. Any property taxes paid by the buyer at closing, although there are special rules for cooperatives.
  2. Prepaid mortgage insurance premiums (MIPs).
  3. Mortgage origination fee. That s is usually expressed as a percentage of the home loan amount, for example one point.
  4. Discount points used to buy down a mortgage rate. These are paid to obtain a lower interest rate, not to originate the loan. These have to be pro-rated and deducted during the life of the mortgage. If you paid $3,000 in discount points to reduce the rate of a 30-year home loan, you d be able to deduct 1/30 th of the points, or $100 per year. If you refinance your mortgage. you ll be allowed to deduct any discount points that have not yet been deducted.
  5. Mortgage interest paid during the year.

To deduct any of these costs, you have to itemize your deductions on a Schedule A. If you take the standard deduction, you cannot deduct closing costs or interest expense.

Closing and Mortgage Costs

Most closing costs are related to the mortgage or are associated with home ownership.

  1. Appraisal fee. Paid to the professional who assesses the value of the property.
  2. Attorney or title company fees. This is for escrow services when you sign the documents and complete a property purchase.
  3. Credit report fee. Covers the costs of checking your credit rating.
  4. Discount points. These are paid to get a lower mortgage rate.
  5. Impounds. These are pre-paid property taxes and homeowners insurance. They are not a lender fee but are simply costs related to owning a home, If you borrow more than 80 percent of the purchase price, most lenders require impounds. They prorate these amounts and add them to the monthly mortgage payment. Then the lender pays your insurance premiums and taxes as they come due.
  6. Inspection fees. It s recommended that buyers have a professional inspection to make sure the home is safe and livable.
  7. Loan origination fee. Charged by the lender for processing the mortgage application. It s usually defines as a percentage of the loan amount (in this case it s an origination point and not a discount point ) but it may also be a flat fee.
  8. Pest inspection fee. This determines if the property has termites or any other infestation.
  9. Recording fee. Charged by the city or county for recording the ownership change for the property and the lender s lien against it.
  10. Title insurance fee. There are two policies the buyer s and the lender s. The first one protects the buyer in the event that the title is not clear. The second protects the lender s interest. If you finance a home purchase, the lender will almost certainly require that you purchase a lender s policy.
  11. Title search fees. A search is intended to uncover any encumbrances on the title, such as unpaid mortgages or tax liens.
  12. Underwriting, processing, document preparation, courier fee, and more. These lender fees may be charged by the lender as separate items but are commonly wrapped into the origination. In the industry, these are called junk fees and they are absolutely negotiable.

Good Faith Estimates

Good faith estimates (GFEs) protect buyers by disclosing home loan costs when they apply for a mortgage. Lenders must provide a GFE, which lays out the basic terms and expected costs of the loan, within three working days of receiving a mortgage application. Many are willing to provide one before you actually apply, which makes shopping for your mortgage easier.

Other lenders do not issue GFE s to loan shoppers. Instead, they provide a worksheet or scenario. There is nothing wrong with this, but you should be aware that only an actual GFE provides certain protections.

Lenders must issue a new GFEs any time there is a material change in your application (for example, you applied for a 30-year fixed loan but then switched to a 5/1 ARM ). Your actual closing costs must essentially match the final GFE.

Closing costs are divided into three categories those which cannot vary from what was disclosed at all (most lender fees fall in this one), those that can come in higher but within certain limits (most of these are services from lender-selected providers), and those that can change by any amount (those are mostly costs from providers chosen by the borrower). We explain more about this in our article: the mortgage closing process explained .

Additional Resources

Here are some additional resources to help you better understand the mortgage costs and closing costs.


Mortgage Broker Fees #reverse #mortgage


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Mortgage Broker Fees

A client called us this week upset that his broker charged him a $5000 broker fee. So we asked where the broker got him approved. Much to our amazement, it was at a major A -lender. More surprisingly, the client s credit was excellent.

To us, this is almost criminal. There was no reason in the world this client should have paid this broker that kind of fee. The lender was already paying the broker a finder s fee. He didn t need to gouge the client for more.

This type of thing drives us batty. Our industry works hard to educate people about the benefits and integrity of professional mortgage planners. Every profession doctors, police officers, even priests have bad apples, but this behaviour hits close to home.

You might wonder why we re bringing this up in front of thousands of readers. The goal here is to warn consumers (and other planners) about what we consider rogue brokers. This is far from typical practice in our industry and people need to know that.

When is a broker fee warranted? Here are sample cases where such fees may apply (this list is not exhaustive):

  • Commercial Mortgages: Unlike residential lenders, commercial lenders often don t pay finder s fees. So there is no other way to compensate planners for the value they add in arranging hard-to-place commercial financing. Moreover, commercial deals take a huge amount of time and often never close for various reasons. In many cases, a planner can do 10 residential mortgages (and be compensated for them) in the time it takes to do one commercial deal.
  • Private Mortgages: When normal lenders won t approve a client, private ( hard money ) lenders are often the last hope. Like commercial lenders, private lenders don t usually pay finders fees. In these cases, broker fees compensate the planner for his/her time and for use of their private lending network. (Building a good network of private lenders is very difficult. We ll do a story on that sometime.)
  • Small Loans: A small deal (e.g. a $30,000 second mortgage) takes up just as much time and often more than a large deal. Really small mortgages also divert the planner s attention from other clients who deserve equal service. Because the finder s fee on these deals is tiny, planners sometimes charge a small and reasonable broker fee.

Remember, in Ontario a broker is not allowed to ask for any fees up front on residential mortgages under $200,000. For mortgages over $200,000, borrowers should get it in writing that any advance fees will be refunded if suitable financing is not provided.

In BC, it s illegal for a broker to ask for fees up front on a residential mortgage.

Generally speaking, advance broker fees on most residential mortgages should be a big red flag. (Click here for a related story). We know of no reputable mortgage planners that charge them, except in the aforementioned circumstances.

Even if it s a subprime (bad credit) client, lenders pay brokers well enough that extra fees shouldn t come up apart from the cases above.

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Compare Reverse Mortgage Rates, Costs, and Fees #mortgage #lender


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Reverse Mortgage Alert

Reverse Mortgage Interest Rates and Examples

If you ve tried searching, you ve likely discovered that it s not easy to find rates on reverse mortgages. For traditional home loans, it s quite easy you can turn to sources such as your local newspapers, well known surveys like Freddie Mac s. and big financial websites such as Yahoo! Finance. Why are reverse mortgages so much less transparent, and what can be done about it? Where are the best rates? In this article, we ll break down the important factors and attempt to answer these question.

How Much does a Reverse Mortgage Cost?

As with any other loan, the interest on a reverse loan is only part of how much it will cost you. There are also closing costs that you must pay; for the Federal Housing Authority s (FHA) Home Equity Conversion Mortgage (HECM) product, these fees are mortgage insurance premiums (MIP), origination fees, third party charges, and servicing fees. Since HECMs dominate the market, we ll focus our attention here.

Insurance Premiums

When you are taking out one of these loans, you will need to pay a mortgage insurance premium at closing and an annual MIP for the entire life of the loan. The MIP charge at closing is calculated on the lesser of the appraised value of the home or the HECM loan limit, which is currently $625,500. In most cases, you must pay .5%.

Though this is not an upfront cost, it is important to note that you will also pay an insurance premium throughout the life of the loan. This charge is 1.25% of the balance.

Origination Fee

These fees vary from lender to lender, though they are capped by the FHA. For homes that are valued at $125,000 or less, the origination fee is capped at $2,500. For homes worth more than $125,000, the lender is allowed to charge 2% on the first $200,000 and 1% on the value of the home above $200,000, for a maximum of $6,000.

Again, there s a lot of information to digest here, so let s consider a reverse mortgage example or two.

1. Home Valued at $100,000
Since the home value is less than or equal to $125,000, the lender can charge any amount up to $2,500. The fee is not based on a percentage of the home s value.

2. Home Valued at $175,000
Since the home is valued at more than $125,000 but less than $200,000, the lender is allowed to charge a maximum of 2% of the home s value, which in this case is a maximum of $3,500.

3. Home Valued at $250,000
Since the home is valued at greater than $200,000, the calculation here is a bit more complicated. For the first $200,000, the lender may charge up to 2%. For the remaining $50,000, the lender may charge a maximum of 1%. Here s how this works out:

$200,000 * 2% = $4000
$50,000 * 1% = $500

The fee is therefore capped at $4,500.

However, not all lenders charge the maximum fee possible. There are even some instances where you ll be offered a rebate. The only way to find the lowest fees is to compare multiple offers, and unfortunately most consumers don t comparison shop.

Servicing Fee

All home loans require servicing, and HECMs are no different. For those who are not familiar with the term, servicing refers to the maintenance activities that are required throughout the life of the loan, including billing and making sure that the borrower remains current on his or her payments. With a HECM, servicing includes sending statements about the loan balance, making sure you are paid the proceeds of the loan, and checking to see that you are meeting tax and insurance requirements.

If there s a servicing fee, it s typically between $25-$35. If the loan has an interest rate that adjusts every year, the fee may be no greater than $30. If the rate adjusts every month, the cap is set at $35. The servicing fee for the first month is taken out at closing, and you continue to pay it throughout the life of the loan. These days servicing fees are much less common.

Other Fees

There are other fees, sometimes called third party fees, that you may need to pay as well. These include appraisal and survey fees, title and title insurance fees, and credit checks. As a general rule of thumb, expect these to cost $1000-2000.

Reverse Mortgage Interest Rates

So far, we ve shown you many numbers but no rates, and there s a reason for this they re difficult to find! In putting together this piece, the authors surveyed about half of a dozen of the largest lenders, and of the six we found only one that was publicly disclosing this crucial information. Fortunately, the United States Department of Housing Urban Development publishes statistics on all HECM originations each month. Based on the published data, here are the past two years worth of average rates.

While we can t give you numbers for specific lenders, we can provide you with information about what determines the cost of interest and provide a few examples for how it could be calculated. First, rates vary based on the program that you choose. Since the vast majority of loans are part of the HECM program, there is no need to worry much about the difference between government and private products, though in general the interest cost of a HECM should be lower since the loan is backed by the FHA.

Fixed vs Adjustable

The second important difference is between fixed and adjustable HECMs. Until 2007, all reverse mortgages were adjustable; according to a report released by the Consumer Finance Protection Bureau in 2012, 70% of loans are fixed rate. In 2013, the FHA made major changes to the HECM program and now

90% of loans are adjustable yet again. Adjustable loans may adjust on a monthly, semi-annual, or annual basis, but in practice almost all lenders offer monthly adjusting products.

An adjustable HECM is composed of an index and a margin, which is set by the lender. The margin never changes after the loan is originated, while the index fluctuates according to the market. Adjustable HECMs use either the Constant Maturity Treasury Index (1 Year or 1 Month) or the London Interbank Offered Rate (LIBOR, 1 month).

To help provide a bit more clarity, here are a few examples of how a reverse mortgage rate could be calculated. Please note that these are not real rates and we have not calculated APRs so as to avoid assumptions about closing costs. The rates below are referred to as compounding rates . The examples are provided solely for educational purposes.

Scenario 1: Fixed
Let s say that a lender is offering you a fixed rate reverse mortgage at a rate of 4.2%. We also know that annual MIP will equal 1.25% of the loan balance. In this case, you would calculate the rate by adding the two together:

To get the APR, the lender would need to disclose insurance and closing costs.

Scenario 2: Adjustable
Let s say that the lender is offering you a loan that adjusts monthly based on the 1-month LIBOR rate with a 2.15% margin. Imagine that LIBOR is current at .2%, and you will need to pay 1.25% annual MIP. You would calculate the rate by adding these components together:

2% + 2.15% + 1.25% = 3.60%

Again, to get the APR, you must know insurance and closing costs.

Final Thoughts

Why aren t these interest rates more readily available? Our best guess is that this is largely a function of the negative stigma that HECM loans still have among the public at large. The lenders are perhaps so focused on overcoming this obstacle that little attention is paid to facilitating comparison shopping. We hope this trend shifts over time.

Hopefully, you leave this guide with a better understanding of how much a reverse mortgage might cost you, both in terms of up front fees and the ongoing interest you will pay. As you ve likely picked up on by now, these costs can be substantial. If, however, you ve compared your options and determined that a HECM is the right option for you, we recommend that you shop around and try to get quotes from multiple lenders.

More Resources