mortgage question re: ysp and par rate
 

quick question about the current state of the market is it common to have a 1% origination and still get hit with a ysp?

i was quoted an interest rate of 4.125% with an apr of 4.2+% including a one percent origination fee. am i wrong for expecting par rate?

Dodd-Frank basically eliminated that - the rate you get should be reflective of that banks pricing model and the rate for the time you locked. Tell the loan officer you want a no points rate, you'll probably see a .25% increase in rate to drop the fee.

Do the math and decide what is best for you.

An APR of 4.2+% for a rate of 4.125% is really pretty good. Generally speaking, if the APR and interest rate are within .25% of each other then it's pretty good. Now if your rate was 4.125% with an APR of 4.75%, stay away. The APR reflects all of the fees and the higher the APR the higher the fees.

A 1 % origination fee is ridiculous(unless its 50K or less). Go elsewhere.

paul my guess is that if i didnt request the 1% origination fee then i would get smacked with a larger apr(as brandon stated). ive relocated with my job and they will cover a 1% origination fee. id rather pay the fees upfront and get as close to par as possible.

Are you going through a bank or a broker? Brokers typically cost more.

Paul, do you work for free? I'd be willing to bet that you don't. Neither do loan officers. That origination is how the loan officer primarily gets paid; granted some of that will go to the loan institution, but no one works for nothing. Sometimes it will depend on the size of the loan (750K loan will sometimes have a lower orig than say a 200K loan), but there is always some sort of origination. Alan, you are totally correct. Without the origination, then the "backend" fees are generally higher which translate into a higher APR or a higher rate itself. Originations of 1% are pretty standard, at least they were when a few years ago when I was in the business.

Banks almost always cost more than brokers.

No. I work for salary, not production. I have been doing this for 10 years, and have never seen a deal from a broker that I can't beat by a good margin, both in rate and fee. You can disagree with me all you want, I am just speaking from experience.

I recently refinanced my house at 3% for 10 years. Didn't take any money out so the mortgage was half the estimated value. I went online and got a written quote from some small broker. I checked BOA who had my mortgage and their rates were high.

When the BOA guy called me to see if I was interested I told him I got better rates elsewhere. He then said if I'd send the quote they would match. In the end they better than matched and didn't even bother with an appraisal/inspection.

They sent someone to my house with the papers and poof it was done.

Thats interesting John, I have had more people come into my office wanting to stop the refi process with BoA because it was a complete pain the ass. They would be so upset with them they didn't mind doing another appraisal. Glad it went well for you.

Maybe it was because they had the mortgage on the house already and I was looking for only half the value in the refi. I'd also been in my same job for 11 years and had a credit score in the 800's. It was a relief to not get the appraisal because my house needs a new roof and I was concerned that it might be a problem. Going to put a new one on this year, but this was a year ago. So "recent" is a bit of a stretch.

This is no longer true. The Dodd-Frank bill eliminated the ability for Loan Officers to be paid in profitability.

A straight salary mortgage person? I've never heard of such a thing.