While there is a lot of publicity about the current historic mortgage rates, it is not as easy to shop for the best product as comparing rates. The Georgia and Florida loan markets are commonly quoted with 1 origination point. This is not always the case, but it is customary for the majority of mortgage companies to charge this fee.
The origination point is a commission to the mortgage company, and is negotiable. If you are being offered the absolute wholesale price that the mortgage company is able to get the money for, then a 1% fee is fair. What you need to keep in mind is that many companies commonly mark up the rate and are being paid by the underlying investor and from you — in essence double-dipping at your expense! Beyond origination fees, be sure to look at the total cost of the fees included in the “800″ section of your GFE. This is typically where most of the junk fees and other items are added.
In the current economy, you should be targeting a total compensation to your mortgage company of 1% – whether in the form of an origination point or in the form of accepting a slightly higher rate, which allows the mortgage company to be paid by their investor.
An important takeaway – Do not mortgage shop by asking only about rates.
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