Understanding loan origination fees

[Siouxzie Hanes]

Are origination fees different across the board and is there a cap?

My estimate was 4.8% rate conventional bank statement loan was high but was okay with it. Now it's coming back as 7.2% when they sent the paperwork and it also shows 2% points, $13,000 origination fee and $2k misc cost for a total of $16,050 in loan fees. Does this seem normal? 

Thank you. 

[Aaron Byrne]

Origination fees are certainly different when compared between lenders. Essentially, that is the fee which compensates the lender for making the loan. This fee may be higher or lower for a number of reasons, one of which includes if there are any "junk fees" charged by the lender like an inflated processing or underwriting fees.

As to a cap, it depends on the type of loan. For example, qualified mortgages have a 3% cap on fees charged by the lender for loan amounts under 100,000.

From what I have been hearing/seeing, conventional rates have ballooned and thus a 4.8% rate on a bank statement loan sounds attractive. I assume that rate was not locked which is why the bank came back with a higher rate of 7.2% which strikes me as being a bit high, but without knowing more details, it is difficult to form any educated opinions in regards to the rate/fees being high/low.

At the end of the day however, you are not locked into any specific financing until loan consummation, so do not hesitate to explore other options. Should you discover this offer is competitive, you can always circle back at that time, but be conscious of any rate locks or potential adjustments that may occur if you delay on moving forward while shopping other lenders.