Loan Origination Fee
Loan Discount
Mortgage Broker Fee
Thanks
Points are paid to buy down the interest rate on the loan.
Origination Fee is paid for the Loan Officer to “originate” the loan.
They really are both one in the same it is just how it is disclosed on the Good Faith Estimate. The Broker Fees are supposed to be paid to the company the loan is being brokered to. So often times you will see “Broker Fee” on one of three lines. Either line 808 under broker fee, but usually you won’t see that there until you sign the Hud 1 Settlement Statement. Or it is on line 810 or 811 underwriting fee or processing fee. Be careful and always look at what the charges are.
Most of the time if the loan is brokered you should not pay more then one of those fees but usually the Loan Originator will put 850.00 on the broker fee, then another $495 under processing fee, and another underwriting fee. Those can get excessive and you will end up paying to much.
Look at the "APR’ on the Truth In Lending disclosure. That is where all of the fees are tied in at. It is a Federal Disclosure box that shows what the true cost of the loan is. And it should never be more then .4% higher then the interest rate.
I hope this helped.
I was actually speaking from the perspective of a loan officer, not a borrower. I want to make sure I understand how to correctly fill out this area on the 1003.
Origination & broker fee are the same, they put money in your pocket. Discount points go to the lender to buy the rate down to a rate lower than par.
In reality they are all the same thing. Points are points are points. 1 point= 1% of the loan amount and with more points or fees in any of these 3 categories, you should be able to obtain a lower rate. Origination points and discount points are tax deductible in the year you purchase the home. Mortgage broker fee is not tax deductable as far as I know.
Slight correction to rbaxter’s comment of “Origination points and discount points are tax deductible in the year you purchase the home”…this is true of a property purchase. On a refi, the points have to be deducted over the length of the refi. For example if you pay $1,500 in points on a 30 year refi, you can only declare $50 a year for the 30 years. If you refi again or sell, you can claim any previously undeclared amount.
Keith
Good point Keith- that’s what I meant by “in the year you purchase the home,” but thanks for clarifying