Mortgage Loan Question - Vacation home North Carolina

[Christina Kinard]

Hello!

I am under contract on a vacation property (10% down) & looking to lock in with a lender. The current lender we got rates from is telling me that they require a percent of the loan up front kind of like buy down points and that its required because the mortgage companies know that people will be refinancing soon. My loan cost illustration has it listed as "Loan Discount Fee". This is about 1.75% and I am still being quoted 8.1% rate since this is second home. I am wondering if this sounds accurate or if i should look at getting another lenders quote. I am under contract so I need to figure out asap.

Appreciate any advice!!

[JD Martin]

You are buying down your APR, which is not unusual. Since the lender is going to offload your loan virtually as soon as it closes, they want to get paid as much as possible on the front end. I don't think it is required by law but if you ask for a comparison you'll probably see there's virtually no change in your payment (without the buy down you'll have a higher APR), and it may be a requirement from that lender to move forward with your loan - i.e. if they're not making money on the front end they have no interest in loaning you the funds at all.