This difference in reporting requirements is why you’ll see an enormous difference in a GFE from a broker versus a GFE from a lender. The costs from the broker may seem high when in reality brokers are able to offer “lender credits” to offset the charges.
The most important factor to consider when comparing GFE’s is using an apples-to-apples comparison. Compare the quoted interest rate, term, loan type, and required funds to close. Many times brokers can offer lower rates and lower required funds to close even though the total costs may be higher than what’s disclosed on a lender GFE. Don’t fall into the trap of only looking at the total cost of the loan. Origination fees are one of the largest fees paid in connection with a mortgage; however other fees will be discussed in subsequent posts.
Furthermore, legislation was enacted to ensure that consumers were paying origination only once on a single transaction. This can be confusing for consumers because even though new laws exist lenders are still not required to disclose any back end compensation or origination tied to the interest rate formerly known as “yield spread premium” (YSP) or “service release premium” (SRP). However, mortgage brokers are required to fully disclose any front-end AND back-end compensation.
Here at Allegiant Mortgage, LLC we are a full service broker. This means we have more than one set of programs or underwriters. We work with over 20 lenders giving us more lending power to help those who need it whether you're a low score borrower or in the market for a jumbo loan. Let us help you today!
A mortgage loan often involves many fees, such as: lender’s origination or underwriting fees, broker fees, and fees for services the lender requires to originate your loan. In addition, other settlement costs are required, such as initial escrow payments if you establish an escrow or impound account, taxes, government fees, recording charges, and title insurance fees.
What is an origination fee?
An origination fee is what the lender or mortgage broker charges the borrower for making the mortgage loan. Origination services include taking and processing your loan application, underwriting and funding the loan, and other administrative services. Origination charges are listed in Block 1 on the Good Faith Estimate (and Line 801 of the settlement statement), and generally cannot increase at closing. This charge is the biggest difference between a broker GFE and a lender GFE.
If you need help with your new mortgage, call Allegiant Mortgage, LLC today!
A Good Faith Estimate (GFE) is a form that lists basic information about the terms of a mortgage loan for which a consumer has applied. The GFE includes the estimated costs related to the home loan and provides basic information about the loan itself, which helps consumers:
The lender or the mortgage broker must provide a GFE within three (3) business days of receiving the loan application or other required information. Loan Fees (except for credit report fees) cannot be charged until a GFE is received and the borrower indicates that they plan to take out the home loan. GFE’s are considered private information and cannot be provided to real estate agents without the client’s prior consent.
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